China: The roar of the dragon

Dragon”, and its roar is already being felt. China has launched its 12th Five-Year Plan (2011-2015) and it entails greater investment in emerging economies, including in the Southern African Development Community. An analysis by the Trade Law Research Centre (TRALAC) reckons that in 2010, total China-Sadc trade volumes were at US$61,5bn, accounting for 48,4 percent of trade between China and Africa making.
This makes China, Southern Africa’s largest trading partner. The trade figures have continued to grow. By the end of 2011, China’s investments in Sadc reached to US$9,9bn, including US$4,98bn in non-financial investments. China has been on the hunt for investments in mining and has significant partnerships with the Zambian government in the extensive Copperbelt, has partnered the DRC’s state-owned Gécamines in cobalt and heavy earth minerals, and Zimbabwe in diamonds.
The Chinese have also established visibility in the retail sector through cheap textiles in most Sadc countries, including Zimbabwe, Botswana, South Africa, Mozambique and Malawi. At the recent China-Sadc Investment and Business Forum, Vice Premier Wang Qishan said, “While there are still many uncertainties with the global economic recovery, China and the Southern African Development Community should strengthen their economic co-operation to help both achieve stable growth and advance the global economy.”
Beijing believes Sadc’s development prospects are good because of its endowment of resources and political stability. The region covers 9,26 million square kilometres, accounting for some 28 percent of Africa’s land area; has a population of 230 million (24,7 percent of Africa’s population) and a GDP of US$200bn (32 percent of Africa’s total). DRCTRALAC notes that, “The most important arena for Chinese market-driven engagement with the DRC is the south-eastern mineral-rich Katanga Province and its ‘copper capital’, Lubumbashi.” While there is no comprehensive data available pertaining to the value of these investments, those consulted during the field research suggested that Chinese entrepreneurs had invested up to US$5 million in processing plants.
In addition, prior to October 2008 when the global economic downturn hit, around 5 000 Chinese company owners and workers resided in Lubumbashi and the neighbouring mining towns Likasi and Kolwezi.
In Namibia, China Guangdong Nuclear Power Holding Corp made a US$1,23 billion offer in 2011 for Kalahari Minerals in a bid to secure a chunk in the country’s uranium sector. Uranium mining contributes about nine percent to Namibia’s GDP. Kalahari owns 43 percent of Australia’s Extract Resources Ltd, which is developing the Husab uranium project. It has been touted as the world’s fifth-largest uranium-only deposit.
China’s foothold in Zimbabwe has been growing since the Southern African country’s independence in 1980, but economic ties really took off when the latter adopted a “Look East Policy” at the turn of the millennium. Chinese investment has focused on agriculture, mining and lately mining. The Sino-Zimbabwe diamond mining joint venture firm, Anjin Investments, has injected close to US$400m into operations in the east of the country and the project is only just starting.
The firm was established by the Zimbabwe government-owned Zimbabwe Mining Development Corporation and Anhui Foreign Economic Construction Company Limited of China. It is tipped to become one of the biggest suppliers of rough industrial diamonds to the international market.
China’s presence in Mozambique has similarly been growing in leaps and bounds. Investment has been focused on the industrial sector, according to an analysis by Mozambique’s Institute for Social and Economic Studies (IESE). In an edition of the Ideas bulletin published by IESE in Maputo, analyst Sérgio Chichava said in 2010 the industrial sector had received the biggest slice of Chinese investment through the Centre for Investment Promotion.
Their figures indicate that 71 percent of Chinese capital investment (US$38.6m) in Mozambique was directed at the industrial sector. However, the capital investment remains lower than that of traditional investors Portugal and South Africa.Other major investments are in construction (21 percent) and services (six percent), while agriculture and the agri-industry account for two percent. Most of the investment and jobs created are the result of three industrial projects, the biggest of which is the Henan Haode Mozambique Industrial Park.
China’s investment has not been without resistance. Businesspeople say they cannot compete with cheap Chinese textiles. Further, they say the financial might of Far Eastern companies pushes them out of construction tenders and establishment of new mines. In 2011, the Namibia Chamber of Commerce and Industry was very vocal on the issue. The chamber CEO, Tara Shaanika told The Southern Times that as much as China was a vital development partner, there was need to push companies to form more joint ventures with local businesspersons. – Southern Times.