CAPE TOWN () -- Eight days into his eight-nation tour of Africa, currently in South Africa, Chinese President Hu Jintao has done as expected - thrown around mucho investment money.
Before the trip began, the Ministry of Commerce said that China would lend African nations $3 billion in preferential credit over three years and double aid and interest-free loans over the same time. Hu previously offered $5 billion in loans and credit during the summit for 48 African leaders in Beijing. So far, China has given out over $1 billion in loans.
China is on a diplomatic offensive in chasing mineral resources in Africa, and it is running rings around those western countries and companies that have long seen the continent as their preserve, displacing traditional players in African markets.
In the past ten months, Chinese president Hu has visited 17 African countries, on a charm offensive aimed at gaining access to oil and the host of other minerals the country needs to fuel its current growth.
In this month's trip, Hu has visited Cameroon, Namibia, Liberia, Sudan, South Africa and Zambia and has planned stops in Mozambique and Seychelles.
In Zambia, China agreed to lend the country $396 million to renovate a major power station and improve its rural telecommunications infrastructure. In addition, China pledged to roll out $800 million into Zambia over the next three years, starting this year.
In Namibia, China has offered the government N$1 billion (US$139.3 million) as a concessional loan over a three-year period until 2010, plus another N$720 million (US$100.3 million) as a credit line. A new grant and an interest-free loan agreement worth N$60 million (US$8.35 million) were signed at a brief public signing ceremony.
And in Sudan, China provided the country with an interest-free loan to build a presidential palace.
Trade between China and Africa reached $55.5 billion last year, up 40% from the previous year and 10 times the amount a decade ago. Accumulated direct Chinese investment in the continent is estimated at $6.6 billion.
Dr. Martyn J. Davies, CEO of Emerging Market Focus, said this could easily reach $10 billion in the next few years.
Davies said China has agreed to loan Angola $6 billion interest free to reconstruct infrastructure. He also noted that Angola supplies 50% of its oil to China, surpassing Saudi Arabia as the country's top supplier. China also purchases massive amounts of oil from Sudan and Nigeria.
At , Davies explored the "drivers of China's Africa strategy," listing the following as evidence of its own insecurities:
- The U.S. invasion of Iraq;
- Russian-Japan energy pipeline that detours China;
- Blocking Japan's bid for a permanent UN Security Council seat;
- Political exclusion of Taiwan;
- Making market space for Chinese exports;
- "Going Global" strategy;
- Effective utilization of capital in Africa;
- Attempts to extract China's economy from international commodity market structures.
"China's capital investment in Africa is politically directed," Davies said.
Most recently in the mining sector, China Vision Resources Limited recently purchased the Oppenheimer family's 33% stake in Anglo American [Nasdaq:AAUK] for $803 million, amounting to approximately 1.13% in the company.
"China has become the most assertive, the most confident investor in our continent, Africa," Davies concluded.
