China has passed Europe and the United States as the biggest trading partner of most African countries. Most run large deficits with Beijing, exporting minerals and buying Chinese manufactured goods.
“The question of the trade imbalance is one that I think will be placed firmly on the table by the African delegates,” the chief executive of South Africa’s Standard Bank Group, Sim Tshabalala, told reporters.
China’s commercial presence in Africa has prompted complaints in some countries that the continent gets too little from the relationship. Africa is a major target of Beijing’s “Belt and Road” initiative to build ports, highways and other trade-related infrastructure, but some critics in Tanzania, Kenya and other countries say they leave hosts with too much debt.
“I would expect African leaders to put on the table the opportunity that arises from building the African continent’s manufacturing capability in a way that is in the best interests of the African continent but benefits china as well,” Tshabalala said Saturday.
The Forum on China-Africa Cooperation, opening Monday, brings together leaders from China and more than 50 African countries. Dozens of African leaders have met with Chinese President Xi Jinping ahead of the conference.
The participants are looking for ways to “advance common growth and development,” said South Africa’s foreign minister, Lindiwe Sisulu.
Some Chinese manufacturers are expanding to Africa but the bulk of Chinese investment goes into mining or construction of roads and other infrastructure. A state-owned automaker, BAIC Group, announced plans this year to start producing electric cars in South Africa.
As Chinese manufacturers move to making higher-value products, “the slack that is produced as a consequence can be taken up by African economies,” according to Tshabalala.
Standard Bank represents the biggest Chinese investment in Africa to date, after state-owned Industrial and Commerce Bank of China Ltd. agreed in 2007 to buy 20 per cent of the African lender for $5.5 billion. Since then, the two banks say they have collaborated on channeling billions of dollars of Chinese investment into Africa.
Some 300 companies account for the majority of China’s business activity in Africa, but the region also has some 30,000 smaller Chinese firms that are of growing importance, said Francois Gamet, head of Standard Bank Group’s Asian operation.
Asked about concerns over Africa’s rising debts to China, the banks said those still are relatively small and most countries can repay them.
“The reality is that Chinese debt as a percentage of total African debt is still relatively small,” said Kenny Fihla, Standard Bank’s chief executive for corporate banking.
Governments in the region have “fiscal discipline,” said Tshabalala.
“Wars, pestilence, violence and conflict have declined,” he said. “We are quite comfortable that most of these countries have both the ability and the willingness to meet their obligations.”
Comments