China Strengthens Grip On Africa

China-Africa summit held yearly in Beijing

The upcoming political transition in China will not result in a change in Beijing’s Africa policy, according to Dr Martyn Davies of Frontier Advisory, a leading research, capital advisory firm that specialises in emerging markets.

Davies says there is a growing dependency factor for African economies on China’s fixed asset investment spending, which will only increase for mineral exporting countries.

“China’s focus is on oil and solid minerals, with agribusiness to grow in importance in the short term,” he told a business meeting recently.

He said in the medium term, African countries that align their development needs to China’s strategic interest will succeed, while others will falter, adding that China is important to Africa in many ways. China is the single largest investor in Africa and is also the single largest financier for Africa.

“If people don’t think China is important to Africa, they are probably aliens,” opined Davies.

Davies further told the meeting that Western countries had been accusing China of currency fixing and unfair trade, but he explained that in the last three decades countries that developed rapidly such as Indonesia and Singapore did so through a well-monitored monetary policy.

According to him, the Chinese currency has been appreciating rapidly in the last five years, while China remains competitive.

“The Westerners call China neo-colonialist, I call China the new capitalist,” he said.

He said China has established the world’s largest manufacturing platform, hence China is moving from being the leading producer to the leading investor and leading consumer.

He said if Walmart were a country, it would be China’s fifth largest market. His presentation showed that China is the only country that invests in African manufacturing, having set up manufacturing plants in countries like Ghana, Angola and the DRC.

Chinese investments are seen as a sinister move, but he maintained that the in the vast majority of China’s huge transactions it is the Chinese that get “screwed” and not the locals.

Davies said the reason why China is the second largest economy in the world is because in China “the state is the entrepreneur” and there is an understanding between the state and the private sector. The state finances local companies operating abroad to make them competitive, Davies said.

“We live in a situation where there is low trust between the state and the private sector. Let us fix that first before we compete with the Chinese,” Davies told the meeting.

He also said that African governments should invest in education and establish high quality training institutions to educate people. Davies was speaking at a breakfast session themed “China’s Agenda for Africa: What does this mean for Namibia?” which was organized by the PricewaterhouseCoopers Business School in Windhoek.