Thursday, 07 November 2013 08:14

Newsletter 38

In this newsletter:

  • China builds sea power to shield oil, mineral supplies
  • India, China, S Africa sign MoUs on trade, investment
  • Chinese Real Estate developer boosts Investor confidence in South Africa

China builds sea power to shield oil, mineral supplies

MOMBASA, Kenya, Oct. 31 (UPI) -- China disclosed this week that its nuclear submarines have started regular sea patrols, underlining Beijing's plans to build a powerful naval force to protect the strategic Indian Ocean shipping lanes that carry the oil and raw materials from the Persian Gulf and Africa that fuel China's expanding economy.
The official Xinhua news agency released photographs of what appeared to be Xia-class subs that will extend Chinese naval operations.

These are China's first-generation of nuclear-armed submarines and are now decades old. Xinhua said they were being "declassified" for the first time, probably because they're being replaced by more advanced Jin-class boats.

But the open display of the Xia-class subs, which Xinhua said "would gallop to the depths of the ocean, serving as mysterious forces igniting the sound of thunder in the deep sea," reflects the growing assertiveness of China's military forces, notably in the disputed oil-rich South China Sea.

At the same time, China's been substantially extending its stake in Africa's oil and gas fields and the continent's other strategic minerals, and the Indian Ocean ports along the East African coastline.

The Indian Ocean has long been dominated by the U.S. Navy and its aircraft carrier battle groups, and the Americans are unlikely to relinquish control of that vast maritime region, so vital to Beijing's strategic planning, anytime soon.

In the meantime, India, China's longtime rival which is now hunting the same resources that China is so avidly pursuing, is also building up its naval forces to limit Chinese encroachment.

According to some estimates, at least 60 percent of the oil exported by the Persian Gulf producers, including Iran, now goes to Asia, primarily China, India and Japan. That makes the Indian Ocean a possible arena of conflict at some point.

U.S. President Barack Obama has unveiled his "Asian pivot," refocusing U.S. military power to meet the Chinese challenge in the Pacific. Beijing says it wants a new world order in which it would be on an "equal footing" with the United States.

"Beijing has long recognized that any confrontation with the U.S. would inevitably lead to major economic crises ... and possibly a global war against the U.S.," the Defense and Foreign Affairs Group of Virginia observed in a recent analysis.

"To sustain this global conflict, the PRC would need huge quantities of hydrocarbons, rare materials, other natural resources and even agricultural products; and these could only be secured for it as a result of a China-dominated Africa."

One of the most important elements in Beijing's master plan has been to focus the flow of oil, gas and minerals from Africa to a single hub on the Indian Ocean for shipping direct to China.

Increasingly, that focus is on a proposed megaport at Lamu on Kenya's northern coast, a giant complex with 32 berths and three international airports along with a 1,000-mile railroad system and 1,100-mile road network that would transport oil and other resources from Sudan, Ethiopia and other regions in East and Central Africa.

The vast emerging gas fields off Tanzania and Mozambique to the south would also feed into this centralized node, which would include a large new oil refinery near Lamu.

Eventually, this complex, officially tagged the Lamu Port and New Transport Corridor Development to Southern Sudan and Ethiopia, or LAPSSET, would connect with a similar project on Africa's Atlantic coast.

That would embrace Nigeria in the west and Angola in the southwest. These are the major oil producers in sub-Saharan Africa.

All told, this massive endeavor would channel African oil production south of the Sahara eastward and give the Chinese effective control of much of the continent's hydrocarbon exports.

As the Americans withdraw from a 12-year conflict in Afghanistan, the United States' longest war, the Chinese are already moving into the region as part of a plan to protect their resource links.

China reportedly is taking over the new deepwater port at Gwadar on Pakistan's Indian Ocean coast, a $200 million facility Beijing built near the Persian Gulf, supposedly as the starting point for more secure overland oil and gas pipelines to western China.

That's just one of several maritime centers, no doubt with naval bases attached, that Beijing is acquiring around the Indian Ocean, a chain of ports, intelligence facilities and listening posts dubbed China's "string of pearls."


India, China, S Africa sign MoUs on trade, investment

Cape Town: India, China and South Africa have signed two separate Memoranda of Understanding (MoUs) to boost trade, investment and capacity-building initiatives amongst cooperatives in three countries.

The South African National Apex Cooperative (SANACO) signed the agreements with cooperatives umbrella bodies at the 3rd BRICS Cooperative Meeting that ended in Cape Town yesterday.

SANACO President Lawrence Bale said cooperatives in South Africa have benefited hugely from the two-day meeting hosted by the Department of Trade under the theme Partnerships for Development, Integration and Industrialisation Through Cooperatives.

"Deliberations centred on critical and strategic issues that affect cooperatives in these countries. Top of the list was promoting trade, investment and collaboration amongst cooperatives in the BRICS countries," Bale said.

"We also intensely discussed and reached consensus on issues related to collaboration on capacity building and ensuring that cooperatives are sustainable," said Mr Bale.

The Deputy Director-General of Broadening Participation at the Department, Sipho Zikode, said he was optimistic that the resolutions of the summit would lead to opening of markets for cooperatives in the BRICS countries and lead to sustainable trade amongst them.

"In my opinion, the South African cooperatives benefitted more than those from other countries," Zikode said.

"We learnt that cooperatives in these countries are highly developed and are operating at the high end of the value chain in various sectors. They contribute significantly to their Gross Domestic Products of their countries, while ours are still at an entry, SMME and micro levels," he said.

Zikode said that the deliberations that have taken place on aspects such as skills transfer, capacity building and infrastructure development will go a long way in improving the development of cooperatives in various countries.


Chinese Real Estate developer boosts Investor confidence in South Africa

The outcome of the R1 billion property deal between chemicals and explosives company AECI and the Chinese property firm Shanghai Zendai, has boosted investor confidence in South Africa's commercial property sector.

SA Commercial Prop News has learnt that Chinese Real Estate developer Shanghai Zendai Property (0755.HK) agreed to purchase land in South Africa for over R1 billion from AECI (AFE).

The Johannesburg property which AECI has owned since 1886, includes approximately 1,600 hectares (3,950 acres) of land and buildings in Modderfontein near the city's main domestic and international airport,
The area, currently used for manufacturing, is about 15 kilometers (9 miles) east of Sandton, the city’s main financial center, and the same distance west of OR Tambo International Airport, Africa’s biggest airport.

The company, based in Hong Kong plans to build a financial hub with residential, commercial, light industrial and retail components. It plans to invest a further R80 billion over 10 to 15 years and aims to create tens of thousands of jobs in the process.
“It will become the future capital of the whole of Africa,” Chairman Dai Zhikang said at a press conference yesterday, speaking through a translator. “This will be on par with cities like New York in America or Hong Kong in the Far East.”
AECI has been trying to sell the land for nearly two years, saying it has become surplus to its operational requirements. The company considered listing its property arm separately or unbundling it to investors. In the end, Shanghai Zendai’s acquisition of the land was considered a better deal for AECI shareholders.

Johannesburg is expected to continue to grow under governmental support through massive infrastructure spending over the next 10 years.
AECI CEO Mark Dytor says the sale is aligned with the group's strategy and the property is fairly valued. AECI Group’s shares closed 2.1% higher at R123.50 on Tuesday, just R3 shy of its record high, taking the total gain to 67% since November 2012 after it announced it had received a payment guarantee for the sale of land.
Shanghai Zendai wants to buy more land in South Africa to diversify its portfolio "in order to build a more stable income stream." It may also use the acquisition as a launch pad to expand operations in the rest of Africa.
The Shanghai-based developer with a presence in 12 cities in China also has a 45% stake in a 320,000 square meter residential, hotel and commercial project in Auckland, New Zealand.

Chinese property developers have expanded into the U.S., Australia, the U.K. and Southeast Asia in the past year.
Head of Edward Nathan Sonnenberg's China practice, Ernie Lai King, advised the deal. He says it bodes well for South Africa's international reputation as an investment destination.

Lai King says Shanghai Zendai, which is listed in Hong Kong, is “highly respected” in the property development industry. The deal has been in the pipeline for the last 3 years and the serious negotiations began approximately 12 months ago.
He says the company’s vision is to build a brand new city, describing the company’s founder Dai Zhikang as a “visionary” whose plans for the development are “breathtaking.”

Dai is one of the most sophisticated business operators in China. His spiritual approach makes him unusual amongst China's property developers, and motivates the way he blends architecture, interior design and psychology.
With upmarket hotels and art galleries amongst its holdings, his Shanghai Zendai company is associated in the public mind with fashionable, mixed-use developments combining retail, office and residential zones.


Last modified on Thursday, 07 November 2013 08:28