China's Xi in SA to advance China-Africa relations

Source: – Fin24, 02/12/2015

Johannesburg - Chinese President Xi Jinping arrived in South Africa on
Wednesday ahead of a two-day summit with regional leaders as Africa
seeks further massive investment despite the Asian giant's economic
slowdown.


A slew of deals are expected to be announced for power plants,
infrastructure and agriculture projects, but analysts say Chinese
largess across the continent has already been reined in this
year.


China drove the commodity boom as it bought up oil, iron ore, uranium
and copper around the world over the past decade, but its growth has
dipped this year, triggering a sharp slump in prices.


Xi said in a statement that the summit, which starts on Friday, would
be "a milestone in advancing China-Africa relations across the
board".


"I look forward to... injecting fresh impetus into the future of
China-Africa friendship and cooperation under the new
conditions."


But Africa is already feeling the pinch, with Chinese investment
falling by more than 40% in the first half of 2015, according to
official data.


"The rhetoric will probably be very excitable, as usual. You have got
to separate the rhetoric from reality," Ian Taylor, professor of
international relations at the University of St Andrews, told
AFP.


"We are likely to see a more sober meeting point between China and
Africa."


Xi will hold talks with President Jacob Zuma in Pretoria on Wednesday
before the sixth Forum on China-Africa Cooperation (FOCAC) opens in
Sandton.


"China's packages towards Africa are going to be more diversified,"
said Yun Sun, China expert at the US-based Brookings research
organisation.


"The Chinese always emphasise that its economic engagement in Africa
is not altruistic.


"In some cases, Beijing is willing to put up with a loss, but I think
Xi is going to be very careful. Their foreign reserves aren't
unlimited."


Exports squeezed
China became Africa's largest trading partner in 2009, with volumes
expected to exceed $300bn this year.


Ahead of FOCAC, China emphasised it had delivered more than $117m of
aid to affected areas during the Ebola crisis in West Africa, and also
sent hundreds of medical workers to help.


Among many African countries hit by the Chinese slowdown, Zambia
exemplifies the impact of falling commodity prices.
Its economy relies on exports of copper, which has fallen in price by
30% this year.


"We have to find other export products to China," said Commerce
Minister Margaret Mwanakatwe, who will attend the summit.


"The price of copper going down has led to job losses in the mines and
the kwacha (local currency) to depreciate (by 45%)."


Zambian President Edgar Lungu last week ordered no new road projects
to be started to save on spending.


Nigeria, the continent's largest economy, has been another major
player in China's recent involvement in Africa.


At least 40 official development projects have been financed there by
Beijing since 2004, including a $2.5bn loan for rail, power, and
telecommunications projects.


The Chinese have also provided military aid and equipment, and are
building a new terminal at Abuja airport.


"They're not going to let up on their very well-flagged goal of being
on the front foot across the continent," said Ryan Wibberley, an
emerging market equity dealer at Investec in Cape Town.


Xi - accompanied by his wife Peng Liyuan - landed in South Africa
after a brief visit to Zimbabwe, where Chinese projects have helped
prop up an economy plunged into crisis under President Robert Mugabe's
rule.