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China Looks to Southern Africa for Resources - 2004-09-29

As the growth rate in China has escalated into double digits and remained there, the country has started scrambling for the natural resources, especially oil, needed to fuel and maintain those levels of growth. Southern Africa is one of the areas China has turned to in search of these commodities.

In the past decade China has greatly increased its economic and diplomatic involvement in southern African countries, notably Angola and South Africa, the two countries with the greatest ability to satisfy its expanding need for energy products and mineral resources.

By the year 2001, nearly a quarter of Angola's total exports went to China, almost all of it oil. Much of those exports are linked to so-called soft loans granted to Angola by China. Last April, the countries concluded another loan agreement in which the equivalent of 10,000 barrels of crude oil per day was tied to a two billion dollar loan to be repaid over 17 years at one and one-half percent interest.

Jakkie Cilliers, of the Institute for Security Studies in South Africa, says China is more likely to grant loans than make donations to African countries. But he says Angola and other African nations welcome the Chinese loans because there are no political conditions attached to them.

"The Chinese view on development is that democracy is not an issue on the agenda, it is something that follows from economic and other development and that countries and governments should be left to resolve these issues on their own terms," he said.

Mr. Cilliers says China's African involvement in the 1960s and 70s was based on political idealism and revolutionary zeal. China's current approach, he says, is driven by what he describes as its rampant economic needs.

"My impression of China is very much that politics follows economic development and that the focus very much really is, not at the moment at the expansion of Chinese political influence, even globally, it is of course there, but that Chinese political and geo-strategic expansion is following its absolutely phenomenal economic growth," he said.

China's involvement with most other countries in southern Africa is modest, but many hope that will change after the 2005 launch of the planned New Asian/African Strategic Partnership, which is designed to improve trade and investment opportunities between this region and Asian countries.

But relations between China and South Africa have already expanded significantly since diplomatic ties were established in 1997, when the volume of trade was one and one-half billion dollars. That figure is expected to top three billion dollars this year and it represents 20 percent of China's total trade with Africa. Investment in South Africa remains fairly modest with some $160 million invested up to the year 2002 in fields such as agriculture, textiles and mining.

Moeletsi Mbeki, of the independent South African Institute of International Affairs, says South Africa does not have oil, but can supply China with much needed minerals and mineral products.

"Industrializing economies such as the Chinese economy, the Indian economy which are huge consumers of steel for example, of steel products, ferroalloys and the like, depend to a significant extent on getting these inputs from South Africa, ferrochrome, ferromanganese, ferronickel, as well as iron ore, as well as other precious and near precious metals," he said.

Mr. Mbeki says that China is also looking to South Africa for technological expertise.

"But you know South Africa is a world leader in the field of deep level mining, of hard rock mining, so if anything we are the ones who are teaching many people in the rest of the world about these kinds of technologies," he said.

One of those technologies is coal liquefaction or oil-from-coal. In August SASOL, South Africa's oil-from-coal producer, signed a letter of intent with China to investigate the feasibility establishing coal liquefaction plants, one in Shaanxi province and the other in the Ningxia autonomous region at a cost of some six billion dollars. China has coal reserves of about 1 trillion tons.