Angolan and South African authorities convinced by potential of economic relations with China

3 July 2006

Lisbon, Portugal, 03 July – The Angolan and South African authorities are catching on to the idea that economic and trade relations with China contribute to the development of their economies and of the continent as a whole, according to two reports to which Macauhub had access.

According to Xavier de Figueiredo, a journalist and political analyst, the partnership between Angola and China “has taken over all the others set up in Angola” – with Portugal and the United States in particular – “in terms of growth rate, diversification of areas and potential growth.”

“The Angolan political elite, particularly those within the presidential circle, has often repeated it gratitude to China, occasionally while showing animosity in relation to western countries and institutions,” the Portuguese analyst said in a report ordered by a Lisbon businessman with important businesses in Portuguese-speaking Africa.

“Chinese loans are less expensive and exempt from political or other conditions, which are seen as interference with internal affairs,” he said.

China’s interest in Angola, which is based on energy resources, size and potential, “is just as clear in the opposite direction – Angola is interested in having a close relationship with China. This is the basis for saying that the relationship will be a long-lasting one,” said de Figueiredo in his report.

In another report, also recently handed in in Lisbon, researcher Miguel Padrão said that the South African authorities were overcoming some initial uncertainty in relation to China’s investment in Africa and now see the potential of a closer relationship.

“Currently, in the circles of power and business in South Africa, the idea that there is enormous potential for generating profit from a relationship with China has now been firmly established,” Padrao said.

In South Africa, which is the largest economy on the African continent, “the business world believes that China does not have the power to maintain current growth rates and that it will be forced to increase foreign involvement in a considerable part of the projects being carried out in South Africa,” he said.

“When that time comes,” Padrão said, China “will look favorably on those that have a position in the Chinese economy,” thus, “companies will have to adjust their strategies to set up models that incorporate Chinese culture and systemic elements.”

According to de Figueiredo, relations between China and Angola would continue to evolve at the same “astonishing” rhythm of the last few years and, he said, it is even expected that Angola could become China’s largest trading partner in Africa, taking South Africa’s place as such.

The analyst said in his report that China was approaching the United States’ position as Angola’s main oil customer, is now becoming a part of prospecting and production of crude oil ion the country and getting involved in the mining sector, taking advantage of Angola’s regional influence to access the Democratic Republic of the Congo, Zambia and Zimbabwe.

Figueiredo also highlighted the fact that Chinese engineering and construction companies were becoming clearly predominant in the market and that this was due to credit lines granted by Chinese banks.

“The reputation the Chinese have is in general good. They are considered to be hard workers and well-disciplined, capable of seeing projects through in a short time and at a low cost, but with quality. This reputation is now established within the elite and middle classes – which directly benefit from the Chinese work,” he said.

In some intellectual sectors and of political opinion, China is however viewed, “with reservations,” and the lack of transparency of the relationship with the political elite is criticized and the long-term benefit of the relationship for the Angolan economy has come under scrutiny.

Portuguese construction companies have been particularly negatively affected by Chinese moves into the market as they “have much higher costs,” despite the fact that the vast majority of the Angolan market has allowed for “a good relationship between competitors,” said Figueiredo.

In terms of its relationship with the United States, Figueiredo added, a closer relationship with China has given Angola the “capacity to negotiate” in key areas.

In the report, Figueiredo said that the projects underway in Angola financed by China were value at around US$10 billion.

These projects include the Sonaref refinery and the rebuilding of the Benguela, Luanda and Moçâmedes railroads, the new Luanda airport as well as the new communications center for Technical and Operational Support Brigade, valued at US$400 million. (macauhub)