In the largest post-apartheid direct investment deal in South Africa, the state-controlled Industrial and Commercial Bank of China, ICBC, has purchased 20 percent of Standard Bank, South Africa's largest lender. VOA's Delia Robertson has more from our bureau in Johannesburg.
The $5.5 billion deal is the largest investment China has made into any foreign market. It also signifies China's determination to invest in resource-rich regions where it can acquire the necessary raw materials it needs for its burgeoning economy.
The deal will see some $4.3 billion flow directly into the South African economy, while Standard Bank has earmarked the rest for investment in Africa, China and some smaller developing economies.
Standard Bank's chief financial officer, Simon Ridley says the deal is important for accelerating trade between the South Africa and China. He also notes that Standard Bank already has significant investments in Africa, and the experience in industries that are important to the ICBC and China.
"And then there is a lot of appetite from Chinese counterbodies [sic] to invest in Africa; and that is in anything but particularly around resources type projects. And we have a long history of financing mining and related resource projects," he said.
Ridley adds that in South Africa, the bank will be expanding in the areas of infrastructure and manufacturing.
"But there is still a lot of activity in two main areas - there is building up of infrastructure in the country and there is a huge amount of investment necessary, which banks like us can take part in. And secondly corporate South Africa is building up manufacturing capacity after many quiet years of just filling up existing capacity so again, we can be part of financing that," explained Ridley.
The deal has already won the approval of the South African banking regulator and Ridley says he believes it has also won the support of the government.
"And secondly it ties up with the diplomatic relationship between China and South Africa, there is and there will continue to be, interaction between the two governments which encourage commercial and investment plans of companies in the two countries," said Ridley.
The deal will also give both banks access to each other's corporate client base, which Ridley says will be particularly beneficial for Standard Bank.