Cape Town — Low costs give Chinese investors in Africa a competitive advantage over their counterparts from other countries, a Chinese analyst told the U.S.-Africa Business Summit in Cape Town.
Professor Yang Guang, director-general of the Institute of West-Asian and African Studies of the Chinese Academy of Social Sciences, was addressing an audience of mostly American and African business leaders.
"They [China] possess low-cost technology for resource development," he said. "They enjoy a low cost of labour – not only unskilled labour but also... engineers and managers; they employ cheap 'Made in China' electrical machinery, and they earn the support of the government."
Yang was speaking at a plenary session of the summit focussing on Chinese and American perspectives on investing in Africa.
Ambassador Princeton Lyman of the U.S. Council on Foreign Relations told the same session that the U.S. could not compete with China's offerings:
"China is able to package their government programmes, their state-owned enterprises, their aid programmes in ways that the United States can't," Lyman said.
"We can't assist an oil company in making a deal by saying if they win [a contract with an African country] we'll build a road [for that country], and it's a challenge for those of us who do things differently."
China's rapidly growing economic presence on the continent has been taking up more and more space on the agendas of a range of entities interested in African business, including governments, local industries, and foreign companies operating on African soil.
The Council on Foreign Relations, the Chinese Academy of Social Sciences, the Leon H. Sullivan Foundation of the U.S. and the Brenthurst Foundation of South Africa have been running a trilateral dialogue on how China-United States relations can benefit African economies.
Giving feedback on the dialogue to the summit, Lyman described China's recent activities in Africa as "almost breathtaking. They've come with such vigour and such energy and resources."
Yang backed Lyman's observations with evidence. China now has more than 800 companies operating in Africa in a wide variety of sectors, he said. About 100 are state-owned and the rest are private but still supported by the Chinese government.
In monetary terms, Yang added, the cumulative value of Chinese investment in Africa totalled 11.7 billion U.S. dollars by the end of 2006.
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"We began by investing heavily in the resource development industries," he said, "but nowadays Chinese investment is widespread in industries such as textiles, agro-industries, electricity, road construction, tourism, and telecommunications…"
Africa has had a mixed response to China's increased presence on the continent.
Sindiso Ngwenya, assistant secretary-general of the Common Market of Eastern and Southern Africa (COMESA), told the summit Africa should focus on its own interests at the same time as trying to meet China's needs.
"There's nothing wrong with them [China] being after resources – everybody is after resources," he said, "but the issue is... what is it that they bring to the table?"
He cautioned that China was "awash with cash, and they are looking for investment opportunities," adding that "we need to engage them with open eyes [and] ensure that it is a win-win situation."
South African trade minister Mandisi Mpahlwa agreed: "Africa, your problem is not the self-interest of the Chinese. Your problem is... how do you leverage this growth, this demand, for maximum benefit?"
