China-Africa trade ties move beyond resources

Nov 26, 2010 12:00 AM

Energy deals took centre stage during a southern African tour by China’s leader-in-waiting, but the growing ties between China and Africa are quickly moving beyond the traditional sectors of energy and infrastructure.
Vice President Xi Jinping wrapped up a visit to South Africa, Angola and Botswana. Xi, who is expected to succeed Hu Jintao as head of the ruling Communist Party in 2012, witnessed the signing of deals worth millions of dollars to build a power plant and solar panel factory and to increase South African exports to China.

Less visible during state visits but increasingly important is trade in sectors besides resources. Chinese consumer goods are making huge inroads in African markets, and more and more Chinese firms are exploring manufacturing deals.
“The key trend going forward here is that we’re seeing hundreds of thousands, literally, of micro Chinese entrepreneurs, procuring from China and selling at the grassroots to African consumers,” said Martyn Davies, chief executive of Frontier Advisory in Johannesburg. “At the higher end, in more formalised retail... maybe three quarters of their procurement, non-food, is from China,” he said.

While China sees Africa as a prime source for the oil and minerals that its hungry economy needs, the continent is also a promising market for everything from tiny hair decorations to automobiles churned out by China’s fiercely competitive manufacturers.
“There are a lot of complementarities between the Chinese and African economies,” said Xue Lan, dean of public policy at Tsinghua University in Beijing.

Better infrastructure in Africa can help move ore and oil out, and let more consumer goods in.
Textiles already make up 16 % of African purchases from China; footwear and clothing account for another 14 %.

Craig Bond, China head for Standard Bank, South Africa’s biggest bank, said China’s prime objective in Africa is obviously to obtain access to natural resources, but there’s another objective in the longer-term.
“The second one is looking at the long game of those markets becoming consumer markets for Chinese goods,” Bond said.

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