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China Rapidly Expanding Economic Links With Africa


A study by the Organization for Economic Cooperation and Development in Paris says China is becoming a major investor in the economies of Africa.

The study was conducted by Javier Santiso, the deputy director of the OECD's Development Center. He says Chinese investment in Africa is averaging $1 billion per year and growing. Almost all of the investment, he says, is concentrated in raw materials needed for China's fast growing industrial economy.

"Basically, the bulk of this foreign direct investment is going into the oil sector," said Javier Santiso. "But the issue is not just to extract the oil, or whatever the commodity, it is secure the transport of this commodity. The Chinese are very clever and understood that infrastructure is lagging behind or is deficient. You don't have to only secure and capture the oil, the copper, etcetera, you have to build the infrastructure [to get the commodities to market]."

From zero five years ago, China is now importing 30 percent of oil from Sudan and Angola, and almost one-third of Burkina Faso's cotton. Sino-African trade has increased by 300 percent in the past decade.

The study says Chinese oil companies have a substantial stake in Sudan's oil industry and are building a 720 kilometer pipeline to the Red Sea. In Nigeria China has invested over $2 billion in offshore oil production. China is also developing new offshore oil fields in Gabon.

According to the study, China and India have become important swing importers, absorbing Africa's surplus commodity output. China's imports of cotton feed the country's booming textile and apparel industry.

The OECD study concludes the speed of China's advance into the African economy is extraordinary.

While helping China's manufacturing industry, the investment has also benefited the sub-Saharan economies, which are heavily dependent on commodity exports. Economic growth in that region has reached on average 5.5 percent a year, the highest rate in three decades.

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