'China helps revalue Africa's assets'
David Mann, economic strategist at Standard Chartered Bank said: "In recent years Africa has looked increasingly attractive for several reasons: fiscal reform, improved control of domestic debt, the shift away from the overextended, lower rates of inflation, better growth, debt relief and the strong rally in commodities.
"China's contribution to this cannot be underestimated. Underlining the importance of China-Africa trade, which has grown ten-fold in the last decade, was the past weekend's China-Africa trade summit in Beijing.
"It was particularly historic because the year 2006 marks the 50th anniversary of the start of the establishment of formal diplomatic relations with Africa with China which started with Egypt and has now rapidly expanded to deepening strategic links with many of the continent's countries.
"China's policy of non-interference in their internal affairs has earned it many friends in Africa, yet China's real importance lies in its economic clout in Africa and it's only just beginning."
Mann notes that while China's appetite for commodities has strengthened commodity prices, it has also helped with bringing external and fiscal balance to Africa.
"China, in turn, is looking to safeguard its economic interests in the continent and this has shaped the nature of its engagement in Africa.
"But this has gone beyond commodities. China has also played a role as direct investor, a provider of concessional loans, and has made a significant contribution to infrastructure development.
"In countries like Angola, where China is by far the largest source of investment, it is making a huge difference. And in return, in the first half of 2006, Angola has become China's single biggest supplier of crude oil.
"China has certainly helped to correct the undervaluation of Africa's assets - commodities prices are higher, mining companies enjoy better valuations, and improvement in the fiscal balances of many African countries thanks to greater investor appetite for government paper."
Mann said that while the relationship was seen as mutually beneficial, it does have some problems.
"China has been a cheap source of manufactured imports for Africa, with African manufacturers finding it hard to compete. In South Africa, the trade deficit with China has become a prickly political issue. And not only there, the recent general election in Zambia saw the opposition candidate win votes by exploiting dissatisfaction with China's perceived disruptive impact."
There are now 1 100 Chinese doctors in Africa and China was supporting clinical trials in a number of African countries in an effort to find a cure for HIV/Aids.
China was also supporting educational exchanges. Currently 11 000 African students were studying in China. Africa was becoming a bigger tourist destination for China - with 16 approved destinations for the Chinese to travel to. I-Net Bridge
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