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Competing for Africa: Is China’s Africa’s Economic Campaign Unstoppable?

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image Chinese industrial site in Sudan

The North Africa Journal | By Arezki Daoud | China's Africa's economic policy remains a major topic among Analysts and watchers. But while the China offensive on the African continent seems unstoppable, a number of issue are facing Chinese companies as they deal with African decisions makers. Cultural differences, lack of transparency and corrupt practices have forced some Chinese companies to be on the defensive. And as the relationships between Africa and China grow stronger, Chinese executives and the officials that oversee them should think harder about the way they do business there.

On July 19, 2012, Chinese officials announced the doubling of the amount of credits allocated to Africa to $20 billion. The money is to be spent on infrastructure, agriculture and industrial projects. The year 2008 was an important year, during which trade between China and Africa exceeded the $100 billion mark. But Chinese activities in Africa are not evenly distributed among African nations or sectors. In terms of African exports into China, they are dominated by commodities like oil, copper, cobalt and cotton for 70% of the total value. As such, China’s focus has been greatly on resource-rich nations like Angola, Sudan, DRC and South Africa. It continues to expand its presence in other countries by funding many of the continent’s institutions like the African Development Fund.

China’s financial activities in Africa consist mainly in the distribution of export credits and subsidizing Chinese firms active throughout the continent, in particular where China has strategic interests related to commodities. It extends loans to African governments with generous terms. State-owned Chinese companies finance projects in Africa through China’s EXIM Bank Which is a central player in the country’s Africa policy since it provides 90% of credits to export for Chinese firms and their foreign clients, while managing and overseeing China’s loans to African governments.

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