China and the New Africa

Publishe on China International Business, by Bradley Gardner, June 10, 2009.

China’s opening up and development is one of the defining stories of globalization. It’s a tale of steady determination, where a country turned itself from a largely agricultural society to the center of world trade and manufacturing, and in doing so lifted hundreds of millions of people out of poverty and experienced 30 years of nearly uninterrupted growth …

… Funds Needed:

With the difficulties facing further globalization, African leaders have expressed worry that investment in the continent is going to dry up. The growth rate across sub-Saharan Africa fell to 5.5% in 2008, and the IMF predicts it will fall further, to 1.7% this year. Trevor Manuel, the South African finance minister speaking at the World Economic Forum in Davos last February, warned that his country and other emerging markets were in danger of being pushed out of international investment markets, and risked “decoupling, derailment and abandonment.”

But Craig Bond, China CEO of Standard Bank, the largest bank in Africa, argues that this is an unprecedented opportunity for China. “The United States and Europe are very definitely [investing less] in Africa, in many instances we’re actually seeing funds just being pulled because of the financial crisis,” he told CIB, “But we believe this is a unique time for China . . . prices [for commodities in Africa] are at an all time low, and China [is the only country with] the capital and skills, [to] come into Africa and renew infrastructure, put the roads down, the rails down, and build hospitals and schools.”

Bond says China’s development will obviously benefit from developing Chinese-African investment ties. Africa benefits from the economic development opportunities and technology transfer.

“You look at some of these special economic zones that China is looking to set up in Africa, off the back of that you’re going to have knowledge transfer, Chinese skills coming into the market . . . and a lot of wealth in a lot of ancillary industries,” says Bond. (full text).

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