As China’s economic engagement with Africa has become more sophisticated, involving more and different players, it has become necessary to look beyond the central government to understand the driving forces behind recent developments. This chapter pays particularly better attention to China’s state financial institutions.
A. China’s African Policy and New Commitments for 2007–09 China’s first African Policy Paper, issued in January 2006, articulates the objectives of Chinese policy toward Africa and how they are to be achieved. Because the intention is to build a new type of strategic partnership, the paper emphasizes “mutual benefit,” “common development,” and “win-win” results in economic relations. It outlines government actions to promote trade, investment, financial services, agriculture, infrastructure, resources development, and tourism. The approach is supported by financial and technical assistance in such noncommercial areas as health and education. The thrust of this policy is vividly demonstrated in China’s new commitments to Africa.
During the Beijing Summit of the Forum on China-African Cooperation in November 2006, President Hu Jintao of China announced new commitments to Africa for 2007–2009:
• Preferential credits: US$5 billion, consisting of US$3 billion concessional loans and US$2 billion export buyers credits.19 • Direct investment: A US$5 billion China-Africa Development Fund to support Chinese FDI in Africa.
• Trade: Further opening up China’s market to Africa by expanding the list of dutyfree African exports and setting up trade cooperation zones in Africa.
• Grants and debt relief: A doubling of 2006 assistance, to build hospitals, malaria prevention and treatment centers, and rural schools in Africa and a conference center for the African Union; and cancellation of all interest-free loans owed by eligible countries that had matured by the end of 2005.
• Technical assistance: Training for African professionals and sending agriculture experts to Africa; setting up agriculture technology demonstration centers in Africa; doubling Chinese government scholarships for African students.
With its heavy emphasis on trade and investment, the new commitment package is consistent with China’s Going Global strategy, which encourages Chinese enterprises to compete for resources and markets beyond Chinese borders.
These commitments do not include trade and project financing by Chinese banks on commercial terms. In May 2007, during the African Development Bank Annual Meetings in Shanghai, officials of China Exim Bank reportedly stated that they plan to provide about US$20 billion in infrastructure and trade financing to Africa over the next three years.2 IMF Working Paper African Department What Drives China’s Growing Role in Africa?
Prepared by Jian-Ye Wang October 2007
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