- 13 May 2010 03:42
#13391100
China boosts business links with S Africa
By Richard Lapper in Johannesburg
May 12 2010
China will on Friday formally announce its largest investment in South Africa for two years, entrenching its position as the resource-rich continent’s most important economic and commercial partner
The China Africa Development Fund and the Jidong Development Group will help build a new cement plant worth at least Rmb1.5bn ($220m, €174m, £148m), the Financial Times has learned.
The announcement lays the ground for a planned August visit to Beijing by Jacob Zuma, the South African president, who has made deepening economic and political ties with China a priority of his foreign policy.
China emerged as South Africa’s largest trading partner last year, partly due to a large rise in iron ore exports, mirroring a trend in other countries on the continent, which have been courted by Beijing for their resources and growing markets.
The latest agreement will see the two Chinese entities joining forces with Continental Cement, a local enterprise, and Women Investment Portfolio Holdings, a South African company dedicated to empowering black women. They will build the new plant in Gauteng province, outside Johannesburg.
The new plant is aimed at making up a shortfall of domestic building products, such as cement, much of its caused by the huge infrastructure programme from construction for the football World Cup.
Congested roads and railways make it relatively costly for South Africa to import cement, so investment in local production facilities is correspondingly more attractive
Growing economic ties with China and other big emerging markets have paved the way for closer political ties, especially since Mr Zuma came to office last May. While his predecessor, Thabo Mbeki, expressed reservations about China’s role in Africa, Mr Zuma’s own enthusiasm has been greater.
A $5.5bn investment by the Industrial and Commercial Bank of China in South Africa’s Standard Bank agreed in October 2007 remains easily the largest Chinese investment in Africa to date, accounting for about a quarter of the funds that Beijing dedicated to the continent.
Much of that investment has concentrated on roads, power plants and other infrastructure but analysts say a growing number of Chinese companies are beginning to buy building and other materials locally. They are also eyeing Africa’s rapidly growing consumer markets.
For example, FAW, a Chinese carmaker, last month announced a $100m investment in South Africa. “Chinese companies are coming to the party,” said Martyn Davies, chief executive of Frontier Advisory Services, a Johannesburg-based consultancy. “They have a high level of confidence in the continent and see South Africa as a springboard for expansion elsewhere.”
Mr Davies predicted that the China African Development Fund will probably fund much of this investment. CADF, which eventually expects to have $5bn available, established a South African office last March. “They have a lot more deals in the pipeline,” he said.
The Financial Times
There is nothing new really except the ferocity with which Chinese companies - mostly state-owned - have invested in and built up relations with African countries. All this seems to be under the radar - despite being reported in mainstream press - while the US is too busy with its domestic politics and war on terror in countries where China also has begun to make investment. You'd think the US wants to contain China but not really at this stage.
By Richard Lapper in Johannesburg
May 12 2010
China will on Friday formally announce its largest investment in South Africa for two years, entrenching its position as the resource-rich continent’s most important economic and commercial partner
The China Africa Development Fund and the Jidong Development Group will help build a new cement plant worth at least Rmb1.5bn ($220m, €174m, £148m), the Financial Times has learned.
The announcement lays the ground for a planned August visit to Beijing by Jacob Zuma, the South African president, who has made deepening economic and political ties with China a priority of his foreign policy.
China emerged as South Africa’s largest trading partner last year, partly due to a large rise in iron ore exports, mirroring a trend in other countries on the continent, which have been courted by Beijing for their resources and growing markets.
The latest agreement will see the two Chinese entities joining forces with Continental Cement, a local enterprise, and Women Investment Portfolio Holdings, a South African company dedicated to empowering black women. They will build the new plant in Gauteng province, outside Johannesburg.
The new plant is aimed at making up a shortfall of domestic building products, such as cement, much of its caused by the huge infrastructure programme from construction for the football World Cup.
Congested roads and railways make it relatively costly for South Africa to import cement, so investment in local production facilities is correspondingly more attractive
Growing economic ties with China and other big emerging markets have paved the way for closer political ties, especially since Mr Zuma came to office last May. While his predecessor, Thabo Mbeki, expressed reservations about China’s role in Africa, Mr Zuma’s own enthusiasm has been greater.
A $5.5bn investment by the Industrial and Commercial Bank of China in South Africa’s Standard Bank agreed in October 2007 remains easily the largest Chinese investment in Africa to date, accounting for about a quarter of the funds that Beijing dedicated to the continent.
Much of that investment has concentrated on roads, power plants and other infrastructure but analysts say a growing number of Chinese companies are beginning to buy building and other materials locally. They are also eyeing Africa’s rapidly growing consumer markets.
For example, FAW, a Chinese carmaker, last month announced a $100m investment in South Africa. “Chinese companies are coming to the party,” said Martyn Davies, chief executive of Frontier Advisory Services, a Johannesburg-based consultancy. “They have a high level of confidence in the continent and see South Africa as a springboard for expansion elsewhere.”
Mr Davies predicted that the China African Development Fund will probably fund much of this investment. CADF, which eventually expects to have $5bn available, established a South African office last March. “They have a lot more deals in the pipeline,” he said.
The Financial Times
There is nothing new really except the ferocity with which Chinese companies - mostly state-owned - have invested in and built up relations with African countries. All this seems to be under the radar - despite being reported in mainstream press - while the US is too busy with its domestic politics and war on terror in countries where China also has begun to make investment. You'd think the US wants to contain China but not really at this stage.
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