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Issue #1586      March 20, 2013

Chinese President Xi promotes Sino-African ties

The fact that China’s incoming president, Xi Jinping, is set to visit Africa on his first foreign trip is a strong indication of where Sino-African relations are headed. But as Beijing focuses on building African industry, Washington has other plans.

China’s incoming president, Xi Jinping

At a recently held meeting of the National People’s Congress in Beijing, China’s leaders unveiled a dramatic long-term plan to integrate some 400 million countryside dwellers into urban environments, by concentrating growth-promoting development in small- and medium-sized cities. In stark contrast to the neglected emphasis on infrastructure development in the United States and Europe, China spends around US$500 billion annually on infrastructural projects, with US$6.4 trillion set aside for its 10-year mass urbanisation scheme, making it the largest rural-to-urban migration project in human history.

China’s leaders have mega-development in focus, and realising such epic undertakings not only requires the utilisation of time-efficient high-volume production methods, but also resources – lots and lots of resources. It should come as no surprise that incoming Chinese president Xi Jinping’s first trip as head of state will take him to Africa, to deepen the mutually beneficial trade and energy relationships maintained throughout the continent that have long irked policy makers in Washington.

The new guy in charge will visit several African nations with whom China has expressed a desire to expand ties with, the most prominent being South Africa. Since establishing relations in 1998, bilateral trade between the two jumped from US$1.5 billion to US$16 billion as of 2012. Following a relationship that has consisted predominately of economic exchanges, China and South Africa have now announced plans to enhance military ties in a show of increasing political and security cooperation.

During 2012’s Forum on China-Africa Cooperation, incumbent President Hu Jintao served up US$20 billion in loans to African countries, which were designated for the construction of vital infrastructure such as new roads, railways and ports to enable higher volumes of trade and export. In his address to the forum, South African President Jacob Zuma spoke of the long-term unsustainability of the current model of Sino-African trade, in which raw materials are sent out and manufactured commodities are sent in.

Xi’s visit highlights the importance China attaches to Sino-African ties, and during his stay, he will attend the fifth meeting of the BRICS, the first summit held on the African continent to accommodate leaders of the world’s most prominent emerging economies, namely Brazil, Russia, India, China, and South Africa. The BRICS group, which accounts for around 43% of the world’s population and 17% of global trade, is set to increase investments in Africa’s industrial sector threefold, from US$150 billion in 2010 to US$530 billion in 2015, under the theme “BRICS and Africa: Partnership for development, integration, and industrialization”.

With focus shifting toward building up the continent’s industrial sector, South Africa is no doubt seen as a springboard into Africa and a key development partner on the continent for other BRICS members. Analysts have likened the BRICS group to represent yet another significant step away from a unipolar global economic order, and it comes as no surprise. As eurozone countries languish amidst austerity, record unemployment and major demand contraction, the European Union has declined as a share of South Africa’s total trade from 36% in 2005 to 26.5% in 2011, while the BRICS countries’ total trade increased from 10% in 2005 to 18.6% in 2011.

The value and significance of the BRICS platform is its ability to proliferate South-South political and economic ties, and one should expect the reduction of trade barriers and the gradual adoption of economic exchanges using local currencies. China’s ICBC paid $5.5 billion for a 20 percent stake in Standard Bank of South Africa in 2007, and the move has played out well for Beijing – Standard has over 500 branches across 17 African countries, which has drastically increased availability of the Chinese currency, offering yuan accounts to expatriate traders.

It looks like the love story that has become of China and Africa will gradually begin shifting its emphasis toward building up a viable large-scale industrial base. Surveys out of Beijing cite 1,600 companies tapping into the use of Africa as an industrial base, with manufacturing’s share of total Chinese investment (22%) fast gaining on the mining sector’s (29%).

RT   

Next article – Ireland’s mortgage crisis

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