Mzansi Afrika

From Johannesburg South Africa, a window on the world

Tuesday, February 22, 2005

China in Angola

Laurence at Commentary.co.za has some interesting thoughts on China and its place in the global economy. China’s increasing role in Africa has also been mentioned before on the local blogosphere. Irin reports on China’s growing investment in Angola and the possible repercussions. China has recently injected 2 billion US dollars into the Angolan economy. The oil-backed credit line, agreed with Eximbank of China in March 2004, is being released on a project-by-project basis to rebuild Angola's war-devastated infrastructure.

"But even before the lion's share of the money is paid out, there are questions about the sustainability of the Chinese projects. "This is a very old-fashioned way of promoting development," said an aid worker who did not wish to be named. "They [foreign enterprises] come in, build dams, roads and bridges, but no one ensures that there's the capacity to maintain them. There is a real risk of creating white elephants - mega-projects gathering dust in the desert," the source commented.

Others fear that the approved projects are focused on boosting the government's popularity ahead of general elections, due in 2006, rather than on the grass-roots development Angola so badly needs. The massive cash boost will not have a noticeable impact on employment. Well over half the working-age population are jobless but, under the agreement, Chinese companies have access to 70 percent of the contracts, leaving just 30 percent for local firms - an arrangement that has already caused consternation. Perhaps the biggest concern among foreign officials in Luanda is the perceived opaqueness of Angola's recent deals. The bilateral Chinese agreement comes hard on the heels of a $2.25 billion Standard Chartered bank loan, which means there is less pressure on the government to answer difficult questions posed by the international community.

Despite being rich in oil, most of Angola's 13 million people are woefully poor, and critics continue to level accusations of corruption at the country's wealthy elite. The China deal has already been dogged by claims of mismanagement. The agreement provides China with crude in return for credit, and also opens the door to possible future exploration prospects. China already imports around 30 percent of Angola's oil, just behind the United States, which buys 40 percent of production. With talk of establishing a Chinatown in Luanda, and weekly flights linking Beijing to the Angolan capital, bilateral ties are expected to become increasingly important."

South Africa recently met with a high level Angolan delegation and signed a bilateral agreement. We've also been trying to muscle in on all that lucre to be made from investing in Angolan infrastructure and other projects. I also wonder how one sided these deals are - are South Africa and China opening up their markets to Angolan goods and products other than oil in any meaningful way? Is Angola going to have to risk the development of its own manufacturing and other industries and be made to open its markets to Chinese exports as a reward to China for all those loans and investments?

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