“The Chinese people cherish sincere friendship toward the African people, and China’s support to Africa’s development is concrete and real,” said Chinese Premier Wen. “We will help Africa build financing capabilities. We will provide $10-billion for Africa in concessional loans.”Last year, China vaulted over the United States to become Africa’s largest trading partner, as two-way trade between the two parties totaled $107 billion. In fact, trade between the two regions has surged tenfold in the past eight years, to almost $107 billion in 2008.
China is the largest supplier of arms to Sudan, which received $7 billion of Chinese defense exports between 2003 and 2007, according to the U.S. Department of Defense.
China’s imports of African mineral resources and energy account for only 13% of the continent’s total exports and its investments in Africa’s oil and gas sector were only one-sixteenth of the total investments in the continent, Wen told reporters at the FOCAC.
Chinese investments in Africa were up 77% in the first three quarters of 2009.
Source: Monday Morning
G20 Fizzles as China-Africa Summit Leads to a $10 Billion Loan
Tuesday, November 10, 2009
By Jason Simpkins, Managing Editor
While U.S. and European officials this weekend squabbled over the specifics of an economic recovery plan, China took another step to ensure long-term economic growth by inking another multibillion-dollar deal with Africa.
Finance ministers from the Group of 20 (G20) met over the weekend to discuss the ongoing healing process taking place in the world’s financial system. Officials agreed that stimulus measures should remain in place, as the global economic recovery is still vulnerable. They also acknowledged that while the dollar is weakening, its downside risk is outweighed by the need to “continue to provide support for the economy until the recovery is assured.”
Analysts say that the dollar’s decline will take a back seat to the economic recovery so long as it remains orderly.
“With that, the dollar is going to remain in a structural downturn,” Paul Mackel, senior currency strategist at HSBC Holdings PLC (NYSE ADR: HBC), told Reuters. “But it’s orderly, and that’s the key thing. The dollar’s going to remain a sell on rallies.”
The euro has risen more than 11% against the dollar this year, and yesterday (Monday) it again broke the psychologically important $1.50 level. Many investors have also sought the shelter of hard assets, with the price of gold breaching new record highs on a fairly routine basis over the past week. Gold gained as much as 1.3% on the Comex division of the New York Mercantile Exchange (NYMEX) yesterday, hitting another fresh record of $1,109.50 an ounce.
The International Monetary Fund (IMF) added to the dollar’s woes by saying in its note to the G20 that the U.S. currency was still “on the strong side” in terms of its trade-weighted basis.
But while international policymakers have agreed that stimulus should be employed until the global economy firms, they failed to reach a consensus on much else. Officials agreed the global economy needs more balance. For instance, the United States needs to reduce its trade deficit, while other countries – such as China and Germany – must become less dependent on exports. But a specific strategy aimed at solving the shortcomings that currently exist was lacking.
“The G20 meeting failed to deliver any real specifics as to how it intended to rebalance the global economy, suggesting the drift in the dollar is not likely to be addressed on a coordinated basis,” Daragh Maher, deputy head of global foreign exchange strategy at Calyon Credit Agricole, told The Associated Press.
G20 finance ministers also offered no details on how they plan to limit bonuses at financial firms, to what extent they will force banks to accumulate more cash reserves, and how they will finance a new climate change agreement ahead of a crucial meeting in Copenhagen next month.
“The meeting turned out to be a mostly irrelevant sideshow on the way to the Copenhagen talks,” Richard Dixon, a director of environmental group WWF Scotland, told Bloomberg News.
The United States and Britain, two historically close allies, even clashed over the application of a so-called Tobin tax. British Prime Minister Gordon Brown advocated the tax on financial transactions to support future bank rescues.
“It cannot be acceptable that the benefits of success in this sector are reaped by the few but the costs of its failure are borne by all of us,” Prime Minister Brown said. There must be a better economic and social contract between financial institutions and the public based on trust and a just distribution of risks and rewards.”
France and Germany have advocated such a tax in the past, but U.S. Treasury Secretary Timothy F. Geithner opposed the idea.
“A day-by-day financial transaction tax is not something we’re prepared to support,” he told Sky News.
Analysts have pointed out that as the recovery gathers steam, the opportunity for real change fades.
“Each day the crisis recedes, the old battle-lines reemerge and it gets tougher to find common conclusions,” Tim Adams, a former U.S. Treasury official who is now managing director at The Lindsey Group, told Bloomberg.
China’s $10 Billion Loan Lands Under the Radar
While finance ministers and central bankers of the world’s 20 most developed nations conferred in Scotland, another, less publicized meeting – the fourth ministerial Forum on China-Africa Cooperation (FOCAC) – was taking place in Sharm el-Sheikh, Egypt.
There, Chinese Premier Wen Jiabao and Chinese President Hu Jintao unveiled eight measures on bilateral cooperation, as well as $10 billion of low-interest loans to African nations over three years.
“The Chinese people cherish sincere friendship toward the African people, and China’s support to Africa’s development is concrete and real,” said Premier Wen. “We will help Africa build financing capabilities. We will provide $10-billion for Africa in concessional loans.”
Indeed, China has found exceptional economic growth at a time when most of the Western world is struggling back from the brink. A continent rich in commodities, which have been skyrocketing in value, Africa is integral to China’s plans for sustained growth.
Chinese oil companies alone have announced plans to spend at least $16 billion to gain access to the continent’s energy assets.
For instance, it was revealed in September that China’s state-owned CNOOC Ltd. (NYSE ADR: CEO) is in talks with Nigeria to buy 6 billion barrels of oil – equivalent to one-sixth of the country’s total reserves.
Acquiring one out of every six barrels of Nigerian oil equivalent could cost between $30 billion and $50 billion. China has made huge investments in Africa in exchange for large supplies of iron ore, nickel, copper, cobalt, bauxite, silver and gold.
Last year, China vaulted over the United States to become Africa’s largest trading partner, as two-way trade between the two parties totaled $107 billion. In fact, trade between the two regions has surged tenfold in the past eight years, to almost $107 billion in 2008.
However, several Western authorities – some of which are concerned about the security of their own operations – have accused China of plundering the continent for its resources with little or no concern its citizens.
For instance, China’s friends in Africa include President Omar Bashir of Sudan – who is currently wanted by the International Criminal Court for war crimes – and Zimbabwe President Robert Mugabe – who has been accused of driving his country into economic ruin and starvation and is heavily sanctioned by the United States and European Union.
“The People’s Republic of China (PRC) aids and abets oppressive and destitute African dictatorships by legit imizing their misguided policies and praising their development models as suited to individual national conditions,” said a report from the Heritage Foundation. “Moreover, China rewards its African friends with diplomatic attention and financial and military assis tance, exacerbating existing forced dislocations of populations and abetting massive human rights abuses in troubled countries such as Sudan and Zimbabwe.”
China is the largest supplier of arms to Sudan, which received $7 billion of Chinese defense exports between 2003 and 2007, according to the U.S. Department of Defense.
Both Sudan’s al-Bashir and Zimbabwe’s Mugabe were present for Wen’s speech.
Still, the Chinese Premier was at a loss in understanding criticism from the West.
China’s imports of African mineral resources and energy account for only 13% of the continent’s total exports and its investments in Africa’s oil and gas sector were only one-sixteenth of the total investments in the continent, Wen told reporters at the FOCAC.
Chinese investments in Africa were up 77% in the first three quarters of 2009.
“So, why do some people only criticize China?” he asked.
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