Arab Today, arab today africa uneasy as china turmoil threatens investment boom
Last Updated : GMT 11:09:22
Arab Today, arab today
Arab Today, arab today

Africa uneasy as China turmoil threatens investment boom

Arab Today, arab today

Arab Today, arab today Africa uneasy as China turmoil threatens investment boom

From power plants in Botswana to diamond mines in Zimbabwe Africa
Johannesburg - AFP

When Chinese company Shanghai Zendai bought 1,600 hectares (4,000 acres) of land outside Johannesburg in 2013, it promised to build the "New York of Africa."

The sleepy district of Modderfontein would be transformed into a $7.8 billion metropolis with a forest of skyscrapers, 35,000 houses and a sanctuary of green space to rival Central Park.

The planned city became a symbol of China's seemingly limitless ambition across the African continent.

But as global alarm bells ring over China's slowing economic growth, future projects on the vast scale of Modderfontein could be under threat.

"It's like we had a big party and the hangover is going to continue a bit longer than we anticipated," Dennis Dykes, head economist at South Africa's Nedbank, told AFP.

"It was unrealistic to believe that China would continue operating at the level it was."
For the past decade, China gobbled up much of the commodities that Africa produces, overtaking the United States in 2009 to became the continent's single largest trading parter.

Surging commodity prices helped the sub-Saharan Africa region grow at over four percent annually for two decades.

From power plants in Botswana to diamond mines in Zimbabwe -- and a spate of shiny sports stadiums -- Africa counted on China for investment, infrastructure and jobs.

Beijing even built the $200 million African Union headquarters in the Ethiopian capital Addis Ababa in 2012 as a gift expressing "friendship to the African people."

Chinese companies are involved in hydropower projects in Zambia, Gabon and the Democratic Republic of Congo.

China built a huge shopping mall in Zimbabwe's capital Harare, laid a ring road around Maputo, the capital of Mozambique, and invested billions in Nigeria's newly refurbished Lagos-Kano rail line.
China has also funded coal power stations, roads and schools in Botswana, mines in Namibia, and in Malawi it provided funds for a new parliament, a university, hotels and conference centres.

However, the rapid pace of investment could be at risk as China grapples with weak demand for its goods and a schizophrenic stock market.

- 'Drunk on China's growth' -

Many experts now question the sturdiness of China's growth and warn of the inevitable damage to those countries who rely on it.

"The first impact is on commodity prices, which directly influences Africa. The second is investment, which will obviously slow down," said Celeste Fauconnier, Africa analyst at Rand Merchant Bank. "We should be concerned."
Already, countries are reeling from the Chinese turmoil, with commodity prices falling to a 16-year low, according to the Bloomberg Commodity Index tracking 22 raw materials.

Bureaucrats have had their pay delayed in Nigeria after the price of oil collapsed to less than $50 a barrel and depleted state coffers.

In South Africa, iron ore sales tumbled 36.9 percent since last year and mining companies have announced major layoffs.

"We are worried because China is one of the major consumers," said Fredson Yamba, a treasury official in Zambia, which derives almost 70 percent of its export earnings from copper.
The China slowdown has exacerbated problems in African countries that depended on high commodity prices to balance their books, with South Africa particularly hard hit.

"It has impacts on our current account balance, it has implications on our trade balance," said Hugo Pienaar, economist at the University of Stellenbosch Bureau for Economic Research.

"You'll see it in investment numbers and you'll see it in employment numbers, and that has spillover effects."

To keep growing, African economies have to wean themselves off commodities, analysts say.

"As China rebalances, commodity driven economies need to rebalance too," said Martyn Davis, head of Frontier Advisory, an emerging markets research firm.

"Most sub-Saharan African countries have been drunk on China's growth. The thing they should have been doing 15 years ago is to rapidly diversify their economies and not rely on commodities," said Davis.

"It's never too late, but the pressures now are intense."

Despite the worries, economists say predictions that China will no longer be a major player in Africa are overblown.

"China certainly enjoys a privileged relationship with many African countries and has access to big infrastructure projects," said Ryan Wibberley, emerging market equity dealer at Investec in Cape Town.

"The general trend of China as infrastructure partner is not going away."

Instead, China's activities in Africa are set for a wholesale review to take into account the new global economic outlook.

"We're in a much lower commodity price regime for the next couple of years," said Dykes. "I must admit, this has a horrible structural feel to it at the moment."

 

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today africa uneasy as china turmoil threatens investment boom Arab Today, arab today africa uneasy as china turmoil threatens investment boom

 



Arab Today, arab today
Arab Today, arab today Jordan airline suggests flyers 'talk'

GMT 11:59 2017 Friday ,24 March

Jordan airline suggests flyers 'talk'
Arab Today, arab today 5 Crafty Must-Have Limited-Budget Ideas

GMT 17:03 2017 Saturday ,25 March

5 Crafty Must-Have Limited-Budget Ideas
Arab Today, arab today Dozens dead in US-led Syria strikes

GMT 08:35 2017 Thursday ,23 March

Dozens dead in US-led Syria strikes
Arab Today, arab today Former head of Egypt’s syndicate submits appeal

GMT 20:11 2017 Saturday ,25 March

Former head of Egypt’s syndicate submits appeal
View News in Arabic - Business: اقتصاد دولي
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Yemen children dream of school

GMT 07:25 2017 Friday ,24 March

Yemen children dream of school
Arab Today, arab today MP submits a petition to dismiss university head

GMT 06:21 2017 Friday ,24 March

MP submits a petition to dismiss university head
Arab Today, arab today Salvage of South Korea's Sewol ferry

GMT 04:51 2017 Friday ,24 March

Salvage of South Korea's Sewol ferry
Arab Today, arab today Prepares to give stargazers an eyeful

GMT 13:38 2017 Monday ,06 March

Prepares to give stargazers an eyeful
Arab Today, arab today Audi RS 5 Coupe acquires new design

GMT 13:22 2017 Thursday ,23 March

Audi RS 5 Coupe acquires new design
Arab Today, arab today Renault Trezor wins design award

GMT 11:56 2017 Tuesday ,21 March

Renault Trezor wins design award
Arab Today, arab today Actress Mervat Amin reveals her role in new series
Arab Today, arab today 2017 already marked

GMT 15:25 2017 Tuesday ,21 March

2017 already marked

GMT 06:04 2017 Thursday ,23 March

Haifa Wahby bets on her new drama show

GMT 22:00 2017 Thursday ,23 March

Number of unwedded girls amounts to 2.5m

GMT 18:57 2017 Tuesday ,21 March

Accessories designer reveals her new collection

GMT 10:34 2017 Tuesday ,21 March

Mexico threatens to ditch US corn imports

GMT 13:26 2017 Friday ,24 February

Expresses Algerian history by woody figures

GMT 15:06 2017 Saturday ,25 March

Dialysis Supplies Dwindle for Syrians

GMT 07:36 2017 Wednesday ,22 March

US, Britain ban laptops on flights

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons

GMT 19:27 2017 Saturday ,11 March

Boualsof launches "Priestess Kahina" collection
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday