Chinese investment in Africa’s infrastructure ‘driving trade increase’

Trade volume between China and African nations surged 16.8 percent year-on-year in the first quarter of 2017 to $38.8 billion “as bilateral economic relations boomed”, according to ministry figures reported by China’s state Xinhua News Agency.

Ministry spokesperson Sun Jiwen said: “This was the first quarterly rebound in bilateral trade between China and Africa since 2015, with Chinese imports from Africa up 46 percent to $18.4bn.”

Sun attributed the trade boost to implementation of “ten major China-Africa cooperation plans” raised at the Johannesburg summit of the Forum on China-Africa Cooperation in 2015, which included interest-free loans and preferential policies.

In addition, Chinese enterprises made more than $750 million in non-financial direct investment to African countries in the first quarter, up 64 percent year-on-year, Sun said. Both sides “are expected to move towards a higher level of economic cooperation this year”, Sun said.

Meanwhile, Chinese exports to Africa declined one percent year on year to $20.5bn in the first three months of this year, compared with an 18 percent drop in the same period a year agao, Sun said.

According to Xinhua, bilateral trade between China and Africa stood at $149.1bn in 2016.

China’s involvement in Africa’s infrastructure development includes the signing by the China Communications Construction Company Ltd in 2014 of a $480m agreement to build the first three berths of Kenya’s Lamu Port.  

In 2015, a Chinese-backed pipeline connecting offshore natural gas fields to Tanzania’s commercial capital Dar es Salaam was formally commissioned by the country’s president.

Separately, the central banks of South Africa and China signed an agreement to establish a renminbi clearing business in South Africa. The South African Reserve Bank said that under the terms of a memorandum of understanding with the People's Bank of China, signed in 2015, the banks would “coordinate and cooperate on the supervision, oversight and clearing” of renminbi in South Africa.

Last year, a state-run Chinese firm was contracted to build a new 388-kilometre railway in Zambia at a cost of $2.3bn over a four-year period.

The Forum on China-Africa Cooperation said last year that China plans to double a special development fund for Africa to $10bn and expand financial support for small firms on the continent. The China Africa Development Fund hit its initial target of pooling $5bn for equity investments in Africa towards the end of 2015.