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China-African Relations
10th NPC & CPPCC, 2007> China-African Relations
UPDATED: February 28, 2007 NO.44 NOV.2, 2006
Great Trek into Africa
Van der Wath discussed China's economic boom and its implications for the African continent
By LI LI
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On the eve of the Forum on China-Africa Cooperation, to be held between November 2 and 5 in Beijing, Beijing Review reporter Li Li talks with South African Kobus van der Wath, the founder and Managing Director of The Beijing Axis, a consulting firm based in Beijing and Johannesburg that serves foreign organizations with a "China agenda," especially those from Africa. Van der Wath discussed China's economic boom and its implications for the African continent.

Beijing Review: Which categories of products have witnessed the fastest growth in trade between China and Africa in the last few years?

Van der Wath: What we see coming from Africa to China are mostly raw materials, metals, minerals, energy, oil and gas among other resources. I think that will continue to be the case.

African governments are trying to get foreigners to invest in mining industries and turn raw materials into products and export those value-added products. This is a long-term goal.

A country like South Africa for example, which is ahead of its peers in Africa, has some technical skills and some skills and capacities in services. Those are also exported to China, which, due to their size, have a significant need for technical services. But some of the backward economies in Africa are not able to compete in the fields of technology and services in China or in any economy for that matter. So they tend to export basic commodities.

China's most import from Africa is largely oil from countries like Sudan and Angola. This won't change. China's exports to the rest of the world and to Africa share some similarities. Africa is a less sophisticated market and tends to attract more low-end goods, covering the whole spectrum of consumer products. But again the bigger and more sophisticated economies in Africa require a lot of industrial equipment from China.

We also see China exporting the fruits of economic success- for example-engineering capacity, and contractors and laborers working in large camps in Zambia, South Africa or on farms in North Africa. So China is successfully and actively using Africa as a market for its capacities.

Which sectors in Africa boast the largest potential of absorbing more investment from China?

Mining, oil and gas sectors are the biggest recipients of Chinese investment, which is also true for China's investment in other parts of the world.

There are three other big sectors. One is the broadly defined manufacturing sector, where China has started to manufacture anything from windows to electric motors in Africa. The second big sector is logistics. Logistics support the ability of Africa to trade with China and the rest of the world. Hence we see a lot of Chinese investment in the logistics sector. Third is the services sector. We are actually seeing Chinese entering the market to establish services businesses.

The big recipient countries of Chinese investment are Sudan, Nigeria and Angola. In many cases, mining energy, oil and gas, are the biggest industries and countries seeing the biggest investment are all rich in oil or gas.

Do you think China's investment in Africa has trickled down to ordinary local people?

I think there was a debate in the past that this was not the case. I would agree that toward the end of the 1990s there had been fairly little benefit felt by locals. The infrastructure [China helped to build], like stadiums and other venues, were not all that useful for the people but served a very productive function in the economy.

But we see China investing far more in economically viable projects. These projects will have a trickle down effect on local industries, local communities and people in the street. We hope this will go forward.

A point worth mentioning is that often when the Chinese invest in Africa where labor is involved, they prefer to take their own labor. Of course, this makes it easy [for them]. They can control their labor and they probably have already been trained to do the job. But in these cases, it is not totally necessary to bring in foreign labor where the local labor could actually also do the job. The question should be asked: [through these actions] is China not underestimating the additional positive impact it can have in the region?

The wider point is the size of the investment and the industries China invests in implies there is adequate ripple effect to positively influence these economies and these communities.

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