China - 中国国际贸易促进委员会

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Africa INVESTMENT Sino-African fund set to swell in 5 years The second phase of raising capital will be concluded at the end of 2011. The China-Africa Development (CAD) fund, the country’s biggest equity fund targeting African investments, is set to expand to $5 billion in the coming five years, said Chi Jianxin, president of the fund. “We expect to finish raising the fund’s second phase of $2 billion by the end of this year and will kick off the third phase afterwards,” Chi said in an exclusive interview with China Daily. Based on current operations, the size of the fund may eventually exceed $5 billion, even though several conditions, such as an efficient exit channel, are required, he said. The CAD fund was set up in 2007 as China's major investment vehicle in Africa, after President Hu Jintao pledged to establish it at the Beijing Summit on China-Africa Cooperation in 2006. An initial sum of $1 billion was provided by China Development Bank (CDB), and the fund was planned to expand to $5 billion finally, although no specific timetable had been drawn up. CDB will also help in the second phase fundraising, said Chi, who was the director of CDB’s Investment Banking Department before his appointment as president of the fund upon its foundation. “We expect more capital from other institutions will join in during the third round of capital raising,” he said. So far, the fund has decided to invest $1.3 billion, including $600 million that has already been invested, in more than 40 projects covering more than 20 countries on the African continent. “We’re very cautious on our investments when making decisions,” Chi said. The fund's investment focuses mainly on the processing industry, including construction materials, automobiles, and household electrical appliances, in addition to agriculture, mining, and infrastructure areas. All the projects will facilitate more than $5 billion additional capital investment to the continent, and will provide more than 100,000 jobs, Chi said. The fund, for instance, is in talks with Chery Automobile Co to invest in an automotive assembly plant project in Africa. Buoyed by Chinese investors’ feverish enthusiasm in Africa, China’s investment in Africa surpassed $1 billion in 2010 from mere tens of millions of US dollars in 2000. Meanwhile, bilateral trade in 2010 rose to $124 billion, more than 11 times higher than in 2000, according to Xinhua News Agency reports. The central government is urging that equal importance be given to attracting foreign investment and encouraging domestic investors to go abroad during the 12th Five-Year Plan period (2011-2015), the first time the country has emphasized overseas investment and will spur even more domestic investment to go abroad, analysts said. “We plan to invest more in ‘mega projects’ within the next five years, such as transportation and harbor construction,” Chi said. “As a financial investor, we're also actively seeking partnerships with domestic strategic investors for big projects.” In addition, Chi said that the fund has started adopting a mergers-and-acquisitions (M&A) strategy to curtail the investment period. “We will seek some M&A opportunities in the future to offset the longer cycle of new projects starting from zero,” Chi said. So far, the fund has set up offices in South Africa, the continent’s biggest economy, Ethiopia, which has attracted a number of projects, and Zambia. The fund is also planning to set up additional offices in countries in western and northern Africa. (China Daily) China-SADC investment forum held in South Africa China, South Africa’s leading trade partner which has been in the past focusing its investment interests in the country’s mining and manufacturing sectors will soon “diversify” to other economic sectors and industries promoting job creation in South Africa, the Chinese investment body revealed on May 19. “South Africa is increasingly becoming China’s investment focus and China wants to diversify its investments in South Africa to other sectors of the economy such as information technology, biotechnology, human resources and other industry services,” China Industrial Overseas Development and Planning (CIODP) Vice President and Secretary General Fan Chunyong said at the China and SADC Investment Conference held at Sinosteel Plaza in Johannesburg. “These investments (will) help to create more job opportunities and improve work skills. Investment towards improving infrastructure will also promote (and) enable economic development in SADC,” Chunyong told the conference attended by South Africa senior government officials. The SADC is acronym for the Southern African Development Community, a regional body that comprises countries in Southern Africa only. The conference attended by several Chinese business leaders and investors was organized by the China Industrial Overseas Development and Planning Association, the South African Department of Trade and Industry (DTI), the SADC secretary and the AfrAsia Bank. It aims to promote more trade and investments opportunities between China and the SADC, taking advantage of South Africa’s fast growing economy and membership to international bodies such as BRICS. BRICS is an acronym for Brazil, Russia, India, China and South Africa, a grouping that provides its members with opportunities to initiate economic arrangements. The conference’s theme was “Capturing the SADC Opportunities” as under BRICS arrangement South Africa is expected to push for the SADC to integrate trade and policies with the other members. (Xinhuanet) 24
TRADE China’s Trade Rush with Africa The BRICS leaders met at the third BRIC summit in Sanya, Hainan, on April 14. South Africa’s first official participation to this summit means the extension of the BRIC group to BRICS. Partnering with the largest economy in sub-Saharan region and the de facto leader of southern Africa will provide strategic access to the African market for the other BRICS countries. China and African trade corridor was formed in the 1950s, but it only started to prosper since 2000. The trade between China and African countries reached a new high of 126.9 billion US dollars in 2010. China-Africa trade figures are seemed to be relatively balanced, as China’s exports to African countries are almost equal to its imports from the African countries. However, the balance in the trade figures doesn’t necessarily mean a real balance. As a matter of fact, the trade between China and Africa is uneven in both terms of geographical distribution and commodity categories. The trade volume between African countries and China varies from country from country. Angola is the biggest trading partner of China in Africa with an average annual trade of over 18.6 billion US dollars; next comes South Africa with an average annual trade of 16.7 billion US dollars. Among China’s top 10 African trading partners, 6 are oil exporters and 3 have diversified economy. The trade between China and its top 10 African trading partners accounts for 76% of the total trade between China and Africa, reflecting a significant concentration in China-Africa trade. From China’s perspective, Africa may be a strategic provider of natural resources; but on the other hand, more and more African countries have become China’s export destinations with significant market potentials. Concerning categories of traded goods, China’s imports of natural resources from Africa is the driving force behind China- Africa trade boom. China’s imports from Africa are dominated by primary products. Since 2004, China’s import of primary products accounts for over 90% of total African imports. Among them, fuel accounts for the majority of Africa’s exports to China (64% of the total China- Africa trade in 2009), followed by iron ore and metals (24%), other bulk commodities, food and other agricultural products (5%). From 2000 to 2009, the share of iron ore and metals in China’s African imports in- creased steadily from 12% to 24%. Chinese companies are stepping up development of African market and exploring the copper market in Zambia, copper and cobalt market in Congo (DRC), aluminum market in Mozambique and Guinea. Especially over the recent five years, China’s share in the iron ore and metal exports of Africa has been rising sharply. From the perspective of China’s export structure to Africa, it has experienced certain changes over the past years. In 2000, China’s exports to Africa are nearly evenly distributed in several areas including textiles & clothing (accounting for 28% of the total African exports), machinery & transportation equipment (27%), and other manufactured goods (26%). Since then, China’s exports to Africa began to transform, upgrading from low-end textile and garment exports to high-end capital goods exports. In 2009, machinery & transportation equipment accounted for the largest share (41% of the total) in China’s exports to Africa, including communications equipment (20%), road transport vehicles (19%) and electronic machinery (18%). Most African countries that have a trade deficit with China are paid back with access to low-cost capital goods export from China in favor of their respective national infrastructure investment; as lack of infrastructure is viewed as one of the greatest obstacles to African economic development. Africa will be able to significantly reduce economy operating costs and become more attractive to overseas investors if it could improve its municipal infrastructure facilities, which is consistent with the purpose of China’s overseas investment. China’s capital investment in sub-Saharan Africa’s infrastructure is experiencing exponential growth, up from 1 billion US dollars in 2001 to 17 billion US dollars in 2010 (including a 130-million-US-dollar special loan to Ghana) with infrastructure projects ranging from construction of power plants, highways, and railroads to airports. (Capital Week) 25
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INFORMATION 2011 China Market Suppl
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INFORMANTION Investment Projects in
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China - 中国国际贸易促进委员会

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