Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.

 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate


On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.


RSS 2.0

The African boom: China and India investments and the implications for Australia

By David Dorward - posted Monday, 13 August 2012

Africa is in the midst of an economic boom. Foreign Direct Investment [FDI] in Sub-Saharan Africa grew from US$9bn in 2000 to over $62bn in 2008, with Ernest & Young capital investment forecast of $150bn by 2015.The number of African households with discretionary income is growing. It is being driven by investments from China and India that could bring Australia's mining boom to a close sooner than expected.

In 2002, China surpassed Britain as Africa's third largest trading partner. In 2006 is surpassed France to number 2 and in 2009 China supplanted America into first place, with trade of over $129bn. Bloomberg predicts China-Africa trade at $300bn by 2015.

The Export-Import Bank of China is the world's third largest export credit agency, providing more export credit in 2008 than the entire G7. Between 2001 and 2010, the China Export-Import Bank lent $67.2bn to Sub-Saharan Africa, $12.5bn more than the World Bank. In 2012 the China Development Bank lent $2bn to small and medium-sized enterprises in Africa; 24 projects in 25 countries.


China's investment strategies in Africa are long-term, based on national security needs, not short-term commercial profit. In 2006 China provided an interest-free loan to Ghana to rebuild the main Accra to Kumasi road. In 2010 the Export-Import Bank provided an additional $16bn loan for infrastructure. In 2011 China funded the Bui hydroelectric project. In 2012 the China Development Bank provided $3bn for a joint Ghana Natural Gas Corp.- China Petroleum and Chemical Corporation natural gas project to be repaid in oil and natural gas from Ghana's offshore fields.

The China Export-Import Bank undercut the IMF in Angola, providing a 17-year $12bn infrastructure loan at 1.5% interest, with a 5-year no interest period, in part to rebuild the Benguela railroad across Angola to copper-rich Zambia. The state-owned China Petroleum and Chemical Corp has expanded its holdings in Angola, which has supplanted Saudi Arabia as a supplier of oil to China.

China's investments in Africa are largely focused on the resource sector: oil, natural gas and minerals. Africa contains 99% of known world reserves of chrome, 89% of platinum, 80% of manganese, 70% of tantalite, 53% of cobalt, to name but a few.

In 1998-99, China funded and built a 1,600 km oil pipeline across Sudan. By 2002, Sudan was supplying over 9% of China's oil imports. By 2009, 13 of the 15 largest foreign companies in Sudan were Chinese, with investments of over $8bn.

In Uganda the China National Offshore Oil Corporation is exporting in Lake Albert. The Export-Import Bank provided a $1.2bn loan to Tanzania for a gas pipeline and processing plant.

But China's investments are not just in oil. In 2007 the Industrial and Commercial Bank of China took a 20% stake in Standard Bank of South Africa, with its network of over a thousand branches in eighteen countries. In 2001, Sichuan Hongda of China bought an 80% stake in Tanzania's coal and iron-ore mining for $3bn. In 2011, Wuhan's WISCO, China's third largest steelmaker, paid $100 m for iron ore exploration permits in Madagascar. Shandong Iron and Steel offered $1.5bn for a 25% stake in the Tonkolili iron mine in Sierra Leone, with reserves of 13bn tonnes. China has major investments in iron ore mines in Guinea, Gabon, Cameroon and the Democratic Republic of Congo.


In 2007 the China Export-Import Bank provided $8.5 bn loan to the Democratic Republic of Congo for joint venture infrastructure projects in exchange for 10m tonnes of copper and 600,000 tons of cobalt. Western mining companies were 'outraged' at the China state enterprise undermining 'free-market' capitalism- despite US and World Bank support for the Tenke Fungurume mining project on much less favourable terms. The IMF demanded re-negotiations of the Chinese loan, threatening to withdraw support for DRC debt forgiveness (mainly loans granted to the corrupt Western-backed former Mobutu regime).

The pace of China's Foreign Direct Investment has occasionally outstripped its managerial capacities. In 2006 China secured the $3bn development of the Belinga iron ore mine in Gabon from former Pres. Omar Bongo, but was slow implementing work. In 2012, BHP Billiton struck a $3.5bn deal with Pres. Bongo Ondima, son of the former president, to take over the Belinga mine.

The rise of China in Africa has been symbolised by the luxurious new African Union headquarters in Addis Ababa, built and financed by China.

  1. Pages:
  2. Page 1
  3. 2
  4. All

Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

4 posts so far.

Share this:
reddit this reddit thisbookmark with Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Assoc Professor David Dorward (retired) is Honorary Associate in the History Program at LaTrobe University.

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Article Tools
Comment 4 comments
Print Printable version
Subscribe Subscribe
Email Email a friend

About Us Search Discuss Feedback Legals Privacy