Out-Law / Your Daily Need-To-Know

China’s slowdown ‘no threat to Africa investment plans’, says ambassador

Out-Law News | 22 Mar 2016 | 12:40 pm | 2 min. read

China's ambassador to Ethiopia has said plans to invest up to $60 billion in African developments will not be threatened by the economic slowdown in his country.

La Yifan told Reuters that Africa could benefit from the situation as Chinese firms seek out investment prospects overseas while China’s economy “adjusts”.

La said: "While the Chinese economy is shifting gears, all those major industries that have powered the explosion of Chinese infrastructure over the past 30 years have to find a place (to invest)."

Chinese president Xi Jinping pledged the funding for African nations last December, saying plans included backing projects involving industrialisation, infrastructure, financial services, "green development and trade and investment facilitation".

The International Monetary Fund (IMF) said last January (6-page / 604 KB PDF) that “overall growth in China is evolving broadly as envisaged, but with a faster-than-expected slowdown in imports and exports, in part reflecting weaker investment and manufacturing activity”.

According to the IMF, these developments, “together with market concerns about the future performance of the Chinese economy, are having spillovers to other economies”.

However, the Forum on China-Africa Cooperation (FCAC) said on 16 March that work towards stepping up partnerships is continuing – including a two-day seminar, held in China’s Hebei province last month, to promote investment in Ethiopia, Kenya, Mozambique and Zambia.

The seminar was jointly hosted by the China Council for Promotion of International Trade (CCPIT), the International Trade Centre and the China-Africa Development Fund. The FCAC said the CCPIT plans to host a follow-up ‘China-Africa Investment Seminar’ and ‘China-Africa Trade and Investment Forum’ “in a number of China’s provinces and cities, including Shanxi, before the end of this year”.

The director of the CCPIT’s trade and investment promotion department Lin Shunjie said February’s seminar discussed plans for investment cooperation outlined by China’s president towards the end of last year.

Lin said: “Africa is actively pushing forward her industrialisation process. It can be said that the development stages of China and Africa are interconnected and there is a promising prospect for capacity cooperation between the two sides.”

According to the FCAC, “more than 3,000 Chinese enterprises are doing business in Africa”. “In 2014, more than 3.6 million mutual visits took place between China and the continent. With an aggregated investment of nearly $ 4.7bn in the energy, mineral, light industry, building material and textile sectors, the Chinese enterprises are beginning to see an initial ‘industrial agglomeration effect’ in Africa,” the FCAC said.

South Africa’s state-owned freight transport and logistics company, Transnet, awarded what it said was the biggest locomotive supply contract in the country’s history to Chinese and South African firms in 2014.

Transnet said the $4.5bn contract to build 1,064 locomotives was South Africa’s single biggest infrastructure investment initiative by a corporate and was designed to support government efforts aimed at ‘road-to-rail migration’.

A report for the World Bank (40-page / 2.70 MB PDF), presented at last year’s Investing in Africa Forum in Addis Ababa, said China and sub-Saharan Africa (SSA) trade had "rapidly intensified since the late 1990s and in 2013 China became SSA's largest export and development partner".