The East is looking to Africa

South Africa should wake up to opportunities posed by China and India, which may soon constitute more than two-thirds of the world economy, says political analyst Daniel Silke. Urbanisation is turning them into huge markets for South African exports. Meanwhile, China’s investment in Africa is hitting billions of dollar a year and, for better or worse, it’s coming without the political conditions attached to Western aid.
Issue date: 21 November 2008

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Glenneis Erasmus

The global economic recession is closing the gap between South Africa and our traditional Western markets. Industries dependent on exports have to redirect their produce to emerging markets that will be less affected by the economic slowdown, most importantly China, India, Brazil and Russia. Russia, however, remains a dark horse, with its stock exchange falling more than 50% following the invasion of Georgia. South didn’t look favourably on China as a trading partner in the past, primarily because former president Thabo Mbeki mistrusted the Chinese and their possible exploitation of Africa.

ANC President Jacob Zuma, however, is better disposed towards the and the trade opportunities the East offers. Strengthening relationships with and makes good economic sense. They are projected to become two of the world’s five greatest economic strengths by 2050. I f one compares China’s US$160 billion (R1,6 trillion) in foreign reserves with the US’s US$62 billion, (R617 billion) it’s clear in which direction the money power is shifting. B ecause of its huge economic growth, has targeted Africa as a strategic partner to obtain natural resources, due to burgeoning global demand for scarce raw materials such as oil, gas, coal, copper, aluminium, iron and steel. It’s estimated nearly one-fifth of the world’s oil demand will come from by 2025. ndia’s demand will also continue to rise.

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This will pressurise oil resources and keep prices high unless a suitable alternative is found. China has also gone from no highways to more than 41 000km of highways – second only to the US. C hina might give Africa the push it needs to get out of its economic slump. There are over 47 Chinese embassies in 53 countries and 800 companies in 49 countries. Direct investment in averaged from US$5 million/year (R49 million/year) to US$6 million/year (R60 million/year) from 1991, while trade has increased 40% year on year to US$66 billion (R658 billion) in 2006. has also indicated it’s willing to double its development assistance to Africa by 2009, providing US$3 billion (R29,9 billion) worth of preferential loans.

Most of that investment is concentrated in African countries that are rich in oil, minerals and timber, such as Chad, Nigeria and Angola. It’s estimated that has purchased 64% of Sudan’s oil production. hina has also sent 100 agricultural specialists to various African countries to set up 10 demonstration sites to help Africa improve agricultural production. A partnership with also offers huge export opportunities at zero tariffs. Many African countries are also eager to shift trade away from the patronising, prescriptive West. China doesn’t impose conditions demanding political or other reforms.

For example: if a country says to the EU that it wants a highway, the responds that the country must first have an election to identify if this need is shared by the majority of the population. Next the tells the country to sort out its finances and reduce corruption. The highway isn’t built in the end. If the country tells China it wants a highway, builds it – no questions asked. oth and India are among the 10 fastest urbanising countries in the world. It’s estimated there’ll be 100 new cities in China by 2040, and they’re adding the equivalent of the entire British electrical output every second year to keep up with the energy demands of its growing population and industry. India and China have over a billion people each and urbanisation is weakening their agrarian nature. t’s already estimated consumes around 50% of the world’s pork, and that together Brazil, Russia, India and China consume 50% of its beef and veal.

 These countries’ demand for protein will continue to rise as their populations become wealthier. s these countries continue to urbanise the nature of their food supplies will change. They’ll become much more dependent on imports and South Africa is well-positioned to exploit this new growing market. – Glenneis Erasmus |fw