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African, Chinese Leaders Urge New Investment Ties at Beijing Summit


Some 40 African heads of state are gathering in Beijing for a summit with Chinese leaders that many hope will mark a new phase in relations. African leaders are hoping to see increased trade and investment, while experts say China is seeking new sources of raw materials.

African and Chinese leaders say the summit will commemorate 50 years of diplomatic ties that began when China recognized Egypt in 1956. But they also say it will launch a new era aimed at boosting trade and phasing out what historically was a donor-recipient relationship.

The Director of the Center for Chinese Studies at South Africa's Stellenbosch University, Martin Davies, says South Africa increasingly sees such meetings as commercial vehicles.

"We are looking to extend market access to our South African corporates, increasingly trying to negotiate a better commercial deal for both South Africa and the region," he said.

Trade between China and Africa's 53 nations grew ten-fold in the past 10 years and is expected to reach $50 billion this year.

Experts say a major force has been China's need for raw materials to fuel its booming economy.

In recent years China has become the world's second largest importer of petroleum, the world's largest consumer of iron ore and a major consumer of other commodities like copper, platinum and timber.

In recent years it has financed numerous ventures in Africa: for oil in Nigeria, Angola and Sudan, copper in Zambia, iron ore in South Africa and timber in Cameroon and Congo.

A regional trade analyst with the South African Institute of International Affairs, Ross Herbert, says this is part of a new Chinese opening to the world community.

"It is part of China's return to the global stage and part of trying to establish itself rather than in the '70s and previously of them being isolated and relatively unconcerned with other parts of the world," he explained.

Davies says China is also trying to forge trade deals outside the traditional international markets.

"China seeks to remove itself from international commodity market pricing, from the London Metals Exchange, from international energy markets, and will not pay so-called market prices, but would rather negotiate prices with governments on our continent," he noted.

He says Beijing seeks to negotiate long-term contracts at fixed rates in exchange for investment in complementary industries.

For example, China has invested $3 billion in an iron ore mine in Gabon that includes not only the mine, but also a railway and a deep-water port to export the ore to China.

On the down side, Africa experts say Beijing is also looking to expand markets for its exports. This could threaten local African industries, such as textiles and manufactured goods, which are less efficient than China's.

The Charge d'Affaires of the Chinese Embassy in Pretoria, Zhou Yuxiao says his government is trying to address this issue.

"In the future, maybe China needs to export high-tech intensive or invest in [technology] intensive products and leave the market of less intensive ones to countries that are poorer than China," he said.

Critics also accuse the Chinese government of selling arms to authoritarian regimes in Africa.

The Chinese government rejects the charge noting that they sell far fewer arms to African governments than many western countries. China says its arms sales are not large enough to destabilize the region.

Davies of the Center for Chinese Studies says China is also willing to invest in projects that are deemed too risky by western and multinational companies. He says as a result Africans are encouraged by China's confidence in them.

"This new-found confidence is changing risk models and engaging the continent and certainly should be welcomed," he added. "We cannot afford to turn our backs against a very confident investor and commercial engager of our countries in the region."

Herbert of the South African Institute of International Affairs says African governments should also show self-confidence in their dealings with China.

"Africa should ask more," he said. "They should sense that China needs these things and they are fairly eager and so now is the time for Africa to say if were going to sell you this mine we want you to build a road to it or build schools around it or build a hospital. Do not just sell off your assets cheaply."

But he says another impediment to foreign investment is mismanagement and poor governance. He says it is vital that African governments re-invest the benefits from foreign ventures in order to foster new economic growth that does not depend on China or any other foreign investor.

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