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November 27, 2015

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China to boost investment in Africa

CHINA is to increase its investment in Africa and buy more products from the continent, an official said yesterday.

“China will export advanced industrial production capacity to African countries,” Vice Commerce Minister Qian Keming told a news briefing.

He said China would also diversify imports from the continent and buy more products in addition to the primary commodities, particularly natural resources, which account for the bulk of China-Africa trade at present.

Qian said China had deliberated for a year on a package of cooperation proposals it is due to unveil at the Johannesburg meeting of the Forum on China-Africa Cooperation next month.

The package is based around China helping African countries upgrade industrial structures, safeguard food security and build infrastructure, Qian said.

The Johannesburg summit will be a “milestone” in China-Africa ties and trade cooperation, he added.

“At the summit, Chinese companies will exhibit their competence in railway, aviation, electricity, telecom, machinery and smart manufacturing,” he said. “To finance bilateral cooperation, China will set up funds and give African countries more low-interest bank loans.”

China has provided African countries with loans worth more than US$20 billion since 2012 to support infrastructure, investment, small and medium-sized enterprises, agriculture and manufacturing.

The government also rolled out about 900 assistance programs in Africa covering agriculture, health, education among others.

When the forum was first established in 2000, trade volume between China and Africa was just US$10 billion. Now China is the continent’s largest trading partner, with trade volume expected to exceed US$300 billion this year.

By the end of last year, more than 2,500 Chinese companies were conducting business in Africa, which has a total population of more than 1.1 billion.

But engagement is also at a crossroads, with China poised for slower growth and Africa seeking to upgrade its agrarian and manufacturing industries.

Adding to the concern was an announcement by the commerce ministry earlier this month that China’s investment in Africa fell by more than 40 percent year on year in the first half of 2015.

“The decline in investment was due to various reasons, such as shrinking demand amid global economic slowdown and volatile geopolitical situations in some African countries,” said Liu Hongwu from the Institute of African Studies under Zhejiang Normal University.

Describing China as “a small player” in African investment, Liu estimated that China accounted for only 3 to 4 percent of total investment in Africa.

He said that, in the long run, China’s investment in Africa will continue to rise, in line with the vision of Premier Li Keqiang, who pledged to boost China’s investment to some US$100 billion by 2020.

The African market has become one of the most important for Lenovo, the world’s largest PC maker and smartphones from Huawei are also popular.

Chinese President Xi Jinping is to attend the forum, a demonstration, analysts say, of the importance China attaches to the continent.


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