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Trade with Africa set to achieve record high
By Ding Qingfen (China Daily)
Updated: 2010-10-15 09:11
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China's investment in continent to focus more on mining, services
BEIJING - China-Africa trade is expected to bounce back to "pre-crisis levels" and is on track to hit a record high of more than $110 billion this year, the Ministry of Commerce said.
Huo Jianguo, director of the Chinese Academy of International Trade and Economic Cooperation under the ministry, also predicted China-Africa trade will "likely grow by around 20 percent in three to five years".
Trade with the continent has outperformed that of China's major trade partners, including the United States and the European Union. China is Africa's largest trade partner.
The figures are even more encouraging considering the slowdown of growth in China's foreign trade during the past five months, said Zhong Manying, director general of the department of West Asian & African affairs with the ministry.
They also reflect the success of the Forum on China-Africa Cooperation, launched in 2000 in a bid to promote trade and investment.
In just eight years, from 2000 to 2008, China-Africa trade has enjoyed annual growth rates of more than 33 percent and reached a peak of $106.8 billion in 2008.
However, due to the financial crisis, bilateral trade dipped 15 percent to $91.07 billion last year.
According to the China-Africa Trade and Economic Relationship Annual Report 2010 released by Huo's academy, China's top five trade partners in Africa are Angola, South Africa, Sudan, Nigeria and Egypt.
The South African figures offer a prime example of just how trade has blossomed.
From January to September of this year, China-South Africa trade grew by 50.6 percent year-on-year to $17.28 billion, compared with 31.5 percent for trade with the US and 34.4 percent for trade with the EU.
The African Development Bank predicted the continent's economy will grow 4.5 percent this year and 5.2 percent next. Some African nations have far exceeded even these healthy predictions, with economic growth in the Congo expected to rise by 12 percent and in Angola by 10 percent, this year.
With China and Africa's consumption capacity expanding robustly, coupled with China's newly launched preferential trade policies on tariffs and loans, bilateral trade will probably "get to or even surpass that of 2008", said Zhong.
By 2011, China will cut tariffs on 95 percent of commodities from the least developed African nations to zero, set up three to five logistic centers in Africa and offer preferential loans worth $10 billion to Africa.
In August, the ministry launched the China-Africa Research Center, a think tank devoted to the study of the two economies, to further trade and investment.
Investment boost
The ministry also predicted China's investment in Africa will be on a "faster" growth track in the coming years, targeting not only infrastructure and manufacturing but also other areas such as mining, energy and services.
"China's investment in Africa will be the focus of China-Africa economic relations and undoubtedly, there is vast potential with China-Africa investment cooperation," said Zhong.
With Africa's economic situation and investment environment improving, Chinese investment has been picking up. By the end of 2009, investment into Africa accumulated to $9.3 billion, and Africa is the fourth largest overseas direct investment destination for China.
The academy's report said "Africa is in great need of foreign investment to go with its economic development, and China has the capability to make it happen".
A World Bank report in 2009 showed funds worth $93 billion are needed annually to improve the continent's infrastructure, but African nations can only supply $45 billion.
With "funds and experience in internationalization", Chinese companies can narrow the gap, according to the China-Africa Trade and Economic Relationship Annual Report 2010.
China's investment traditionally focused on textiles, agriculture, machinery equipment and manufacturing, but more recently it has helped develop mining and services to meet surging demand for commodities.
"China's investment will expand into new sectors including mining, finance, aviation and logistics, and renewable energy," Zhong said.
Chinese investment in Africa surged during the past decade, with the figure growing to $1.44 billion in 2009 from $210 million in 2000.
Zhou Siyu contributed to this story.