Developed world ‘invests far more in Africa than China’

BY MARK ALLIX, 19 APRIL 2013, 08:23

Chinese+dragon+China+XXX+high+resAFRICA’s annual trade with China has doubled to $199bn since 2008, but Chinese foreign direct investment into the continent, which is just 3%, is miniscule compared with the developed world, a senior Chinese banker told the China-Africa Business Summit in Sandton this week.

China’s increasing presence in Africa comes amid perceptions in the European Union (EU) that South Africa’s relationships with Brazil, Russia, India and China, as part of the Brics group of nations, are meant to replace that of its biggest trading partner. This despite the EU accounting for R382bn in trade with South Africa last year, according to widely published data, compared with R328bn for China and the US combined.

While China would aim to turn foreign direct investment flows into Africa around, its $3.4-trillion in foreign exchange (forex) reserves were not a panacea for the country’s further growth, said state-run Export-Import Bank of China chief economist Wang Jianye. He said this was because much of the world’s largest forex reserves were held in both US and German debt instruments, and not as equity. "China will have to increase the share of equity in foreign assets."

Mr Wang also said double-digit wage increases in the world’s second-largest economy, and the rampant rise of land prices, would mean Chinese manufacturers would have to automate, move out of the country, or shift to higher-value production. To this end, the biggest challenge facing China was the rising domestic cost of production. This would likely shift significant manufacturing to Africa, he said.

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Source: http://www.bdlive.co.za/africa/africanbusiness/2013/04/19/developed-world-invests-far-more-in-africa-than-china

 

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