Commodity Flux and China’s Africa Strategy
From the Jamestown Foundation’s China Brief:
During the commodity price boom, China invested massively in Africa seeking to lock up as many raw materials as possible. Some in academia spoke confidently of China having a fifty or one hundred year strategy toward Africa. In practice, Chinese entrepreneurs have been the first to leave when the market turned since the global decline in commodity prices accelerated with the collapse of Lehman Brothers in September 2008. For instance, according to interviews the authors conducted in Congo, more than 60 Chinese mining companies have left the mineral rich Katanga the last two months, as cobalt and copper prices have tanked. Over 100 small Chinese operators are reported to have left Zambian mines for the same reason.
A similar retreat may be occurring at the strategic level. In 2007, it was announced that China would lend the Congo $5 billion to modernize its infrastructure and mining sector. Under a draft accord, Beijing earmarked the funds for major road and rail construction projects and for rehabilitation of Congo’s mining sector, while the repayment terms proposed included mining concessions and toll revenue deals to be given to Chinese companies. In simple terms it meant 13 million tons of copper for $5 billion—or (even at today’s depressed prices) $40 billion for twenty-times less . The China-Congo deal, however, has gone very quiet as the copper price has plummeted. The market—not grand strategy—is the main Chinese motivation in Africa.
A previous article from Reuters presents a very different picture of China’s interest in Africa amid the economic slump.