Tuesday, 31 July 2012 15:47

Newsletter 15

In this newsletter:

  • Beijing hosted forum on China-Africa cooperation (FOCAC)
  • Chinese government pledged to extend another US$20 billion
  • More to come between Africa and China as the new decade goes to the third year

Beijing hosted forum on China-Africa cooperation (FOCAC)

Beijing on July 19-20 was busy taking care of the Africa China summit which drew the attention of the global media as the two have been having remarkable partnership over the past couple of years. The summit brought under the same roof ministers from 50 African states and officials of the People’s Republic of China. The Forum on China-Africa Cooperation (FOCAC) also attracted six African heads of state from South Africa, Benin, Cote d’Ivoire, Equatorial Guinea, Djibouti and Niger. President Hu Jintao attended the opening ceremony and delivered the keynote speech, during which he detailed the achievements of Sino-African cooperation over the past 12 years, outlined the bright future of the new type of strategic partnership between China and Africa, and announced a series of policy measures that the Chinese government will implement to further promote bilateral cooperation. Also attending was the United Nations Secretary General Ban Ki-moon.

In the concluding news conference on July 21, Chinese Foreign Affairs Minister Yang Jiechi, noted that “We are pleased with the results of our cooperation since we launched this forum. African countries have registered tremendous growth in infrastructural development.

The Foreign Minister went on to say that “We are committed to open more and more prospective ways of strengthening our mutual cooperation with Africa.”

FOCAC was formed in 2000 and its existence has fostered the growing trade and state-to-state relations between the African continent and China.

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Chinese government pledged to extend another US$20 billion

On July 19 the in concessional loans to various African states over the next three years, the Chinese government revealed it plan to inject $20 billion in Africa twice the amount it pledged three years ago. These loans will assist in developing infrastructure, agricultural development, manufacturing and the growth of small and medium-sized enterprises.

The reasons for targeting these sectors are not far-fetched. First, regional trade on the continent is minimal, hampered by infrastructure and poorly equipped customs.

Secondly, and perhaps China’s main intention, the Chinese are losing their low wage labour advantage. To remain competitive, China has to move up the value chain towards high-end services and products. In addition, the country is looking to keep its economy growing. These structural changes in China’s economy are an opportunity for Africa.

According to Zhong Jianhua, China’s special envoy to Africa China’s economy transitions, shifting labour intensive industry to regions like Africa offers production opportunities for the continent. He added that “African countries should seize this opportunity. They can step into a track that China has taken in the past to develop their own industry.”

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More to come between Africa and China as the new decade goes to the third year

Steered by Forum on China-Africa Cooperation (FOCAC) and stimulated by the fulfillments of Chinese commitments on economic cooperation and trade announced at the fourth ministerial conference of the forum on China-Africa cooperation in 2009, the two sides have withstood the test of the financial crisis. As a result, the trade and economic cooperation have witnessed faster growth across wider areas in more diversified forms.

The trade volume between China and Africa hit $166.3b in 2011, growing by 83% from 2009. China is the largest trading partner of Africa. China’s direct investment in Africa reached $14.7b by the end of 2011, up 60% from 2009. More than 2,000 Chinese companies have invested in Africa.

The diversity of projects devised and implemented under the helm of the Chinese government and in cooperation with Africa counterparts has in many cases benefits the locals. In the second decade of the 21st century, trade and economic cooperation between China and Africa finds itself standing at a new starting point but as China and Africa both need to restructure economies and transform growth patterns, there is a pressing need and great potential for the two sides to collaborate on industrial relocation.

China will continue to expand investment cooperation with Africa and migrate to Africa industrial chains so as to extend the value-added chain for “Made in Africa” products and create more job opportunities for Africans.

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Last modified on Tuesday, 31 July 2012 15:54