Angola: Financial crisis to bring Angolan and Chinese economies closer together, South African researcher says

26 May 2009

Cape Town, South Africa, 26 May – The deepening international financial crisis and increasing uncertainty in international markets, the price of oil and in credit markets will strengthen the economic relationship between Angola and China, researcher Lucy Corkin concluded in a periodical publication published by Stellenbosch University, South Africa.

Noting a visit to China by Angolan President José Eduardo dos Santos to China, the second in a five month period, Corkin said that Angola was increasingly looking to China as a source fo economic stability.

“Despite policies outlined in Luanda to diversify the Angolan economy and its economic partners, following global financial uncertainty, China is considered to be a guarantee for difficult times. Especially when Angola’s access to foreign capital is limited,” said Corkin, a researcher at the Asia-Africa Centre at the School of Oriental and African Studies (SOAS), of the University of London.

In the “China Monitor” publication of the Centre for Chinese Studies of Stellenbosch University – the latest edition of which is themed “Chinese Involvement in Angola: Mutually Beneficial Commercial Pragmatism?” Corkin analysed the possible effects of the current economic crisis on relations between Angola and China, concluding that Beijing would know how to take advantage of the crisis, at least in relation to Angola.

The researcher said that the global economic crisis had made the Angolan state’s financial position weaker, particularly because the drop in oil prices had reduced the influx of foreign currencies, investment, revenue and capital. The adoption by Western oil companies of a more conservative risk profile in terms of oil investments had also reduced Angola’s room for manoeuvre, Corkin said.

“China thus has more trump cards, as one of the few buyers with capacity to increase oil imports. As well as this, Chian’s considerable incvolvement in funding Angola’s government projects puts Beijing in a stronger position, particularly in the current economic climate and because the national reconstruction project was seens as one of the most important political priorities,” she added.

“With oil at high prices it was easy to play between the interests of the new arrivals [China] against more traditional investors such as Brazil and Portugal, but with funding drying up over the last six months, the Angolan government’s options have also dried up,” said Corkin.

The author also cited World Bank official as saying that China may already have granted Angola funding that had not been announced of up to US$8 billion. (macauhub)