December 1, 2009
In an increasingly energy-hungry world, no country is hungrier for natural resources and oil than China. Its 8 to 10 percent yearly growth rates over the last two decades have made the Chinese economy the second largest in the world today. With close to 2 trillion dollars in forex reserves, its government was able to secure lucrative oil and gas deals (see my earlier Blogactiv posting on the Chinese-Russian pipeline) or to enhance the visibility of Chinese companies in Latin America and Africa in particular.
According to “Le Quotidien d’Oran”, the Chinese FDI investments in Africa have soared from 327 million euros in 2003 to 5.2 billion euros in 2008, whilst trade between the two parties has reached 107 billion dollars in 2008, representing a 45 percent increase.
Accused in some Western circles of “neocolonialism”, China is simply using its sizeable forex reserves to extend soft loans to embattled African governments, to help local companies extract oil in Sudan or mine natural resources in Congo and other parts of Africa. China is building Algeria’s freeways, developing new mining projects, financing housing, hospitals and schools. According to the same newspaper, the United States and the European Union are lagging behind in their aid programs for Africa by comparison.
Last month, during the 4th China-Africa co-operation forum which took place in Sharm El Sheik in Egypt, premier Wen Jiabao has announced that despite the effects of the financial crisis, China will allocate a further 10 billion dollars in new loans to African countries over the next 3 years. This comes on top of debt relief for the poorest countries on the continent, earning China the nickname of “great brother from the Orient”.
As the competition for natural resources is only going to intensify in the future, the European Union would do well to match China’s soft power agenda in Africa, which would also benefit impoverished African countries in need of foreign direct investment (FDI), adequate infrastructure and fresh development loans.