Chinese Enterprises’Confidence Towards African Market Increases

By Lily Wang

Since the establishment of the Forum on China-Africa Cooperation 20 years ago， the trade between China and Africa and Chinas direct investment in Africa have increased 20 fold and 100 fold， despite the impact of the COVID-19 pandemic.

“The business circles in both China and Africa have been working hard to combat the negative impact of the COVID-19 pandemic and the gloomy world economy， in order to promote the growth of China-Africa trade and economic cooperation. Bilateral trade has reached its historical peak and the investment cooperation has been growing fast，” said CCPIT Chairperson Gao Yan at the Seventh Conference of Chinese and African Entrepreneurs recently.

The Conference of Chinese and African Entrepreneurs is an important trade event under the framework of the Forum on China-Africa Cooperation， and represents a high-level dialog mechanism between Chinese and African business circles. This years conference was held both online and offline， with the main venue being in Beijing. Representatives from the business circles in both China and Africa were involved in deep discussions about deepening cooperation on trade and investment， promoting industrialization and digitization， advancing the economic recovery in the post-pandemic world， and promoting sustainable development.

Cooperation mechanism making progress

At the opening ceremony， Deputy Commerce Minister Ren Hongbin stated that the trade volume between China and Africa has been increasing， and in 2020， the volume of bilateral trade reached USD 187 billion. The new trade business model including cross-border e-commerce has been growing fast； and the direct investment in Africa by Chinese enterprises has also been growing. A batch of key infrastructure and social programs such as railway and power stations have been established and put into operation.

Gao Yan said that on the one hand， the Chinese business industry has supported and organized for enterprises in Africa to reproduce， stabilizing the local industry chain and supply chain and promoting the African economic recovery； on the other hand， Chinese businesses have been deeply engaged in the African market and industrialization， and have invested in local infrastructure and the digital economy， so as to help African countries improve self-development and industrial production capacity and inject new momentum into Africas sustainable development.

In 2018， the Beijing Summit of the Forum on China-Africa Cooperation was successfully held， which led the China-Africa trade and investment cooperation to a new phase. Ren Hongbin said that in the past 3 years， China has signed Belt and Road cooperation agreements with 46 African countries and the African Union Commission. Silk Road e-commerce and other cooperation mechanisms are also progressing. China attaches great importance to the strategic leading functions of the Forum on ChinaAfrica Cooperation， and has been working hard to implement the eight actions raised during the Beijing Summit. The capital investment of USD 60 billion has been made available and the programs achievements have brought benefits for people of both China and Africa.

Ren Hongbin also expressed that China will continue to provide vaccines and anti-pandemic material assistance to African countries， and will guide enterprises in carrying out vaccine production cooperation with African countries. This will strengthen communication and coordination with African countries and promote various forms of investment facilitation arrangements， enhance strategic docking with African countries and improve the pertinence and timeliness of China-Africa economic and trade cooperation policies， actively engage in the development of the green and recycling economy of Africa， so as to improve the greenness of the Belt and Road programs； support Chinese and African enterprises in improving the level of cooperation in maritime， aviation， railway， highways and other fields through trade and investment， and strengthen cooperation in logistics infrastructure information construction.

Senegals Minister of Economy Amadou Hott addressed the fact that the pandemic has had a huge impact on the African economy. At present， African countries are seeking to establish a sustainable economic and social development model. The holding of this conference is timely and of great significance. China-Africa cooperation has good resilience and will benefit Africas economic development. The free trade zone of the African continent provides a better opportunity to further strengthen cooperation. As the African co-chair of the Forum on China-Africa cooperation， Senegal believes that China will play a more important role in future world economic development， and looks forward to working with China to deepen China-Africa cooperation within the framework of South-South cooperation and achieving win-win situations and common development.

Ibrahim Arabi， President of the African Chambers Association， said that the African business community attaches importance to developing its cooperation with China and hopes to promote the exchange of investment， technology and management experience. Under the Belt and Road Initiative， many infrastructure projects have been completed in Africa， which have provided support for Africas development. The African Chambers Association will continue to work to strengthen cooperation， promote the maximum use of the rich natural and human resources of the African continent， transform Africas highquality natural resources into products with a higher value， create new investment and trade opportunities， and achieve economic prosperity.

Trade and investment prosper

China has been Africas largest trading partner for 12 consecutive years. According to data from the General Administration of Customs of China， from January to October 2021， the total trade between China and Africa reached USD 207.06 billion， a year-on-year increase of 37.5%. This figure is close to the trade volume between China and Africa in the entire year of 2019， which was USD 208.7 billion. This again shows the trade prosperity between China and Africa.

In recent years， China has been expanding the channels through which African products can enter the Chinese market and has been sharing Chinas opening-up opportunities with Africa. From 2018 to 2020， more than 450 enterprises from nearly 50 African countries participated in the first three CIIEs （China International Import Expos）. During the fourth CIIE， which was concluded not long ago， South Africa alone received intended orders of approximately USD 38 million.

In recent years， there is an obvious trend of China encouraging enterprises to import nonresource products from Africa， and more and more green and high-quality agricultural products are entering the Chinese market from Africa. Over the past five years， the average growth rate of Chinas import of African agricultural products has reached 11.4%， and China has become the second largest destination for African agricultural products. Chinese enterprises have also extensively carried out agricultural technology investment and training in Africa， improved Africas position in the global value chain， and made positive contributions to the development of the African agricultural industry and the promotion of poverty reduction.

Chinas investment in Africa also increased against the backdrop of the pandemic. According to data from Chinas Ministry of Commerce， from January to September 2021， Chinas direct investment in Africa reached USD 2.59 billion，a year-on-year increase of 9.9%， 3 percentage points higher than Chinas overall foreign investment. The growth rate has exceeded that of the same period in 2019. The amount of newly signed contract projects in Africa by Chinese enterprises reached USD 53.5 billion， and the completed turnover was USD 26.9 billion， with a year-onyear increase of 22.2% and 11.6% respectively， showing the confidence of Chinese enterprises in the prospects of the African market.

China is a “rising star” in terms of investment in Africa. Driven by the Forum on ChinaAfrica Cooperation， China has become the fourth largest source of investment in Africa. According to the report on Chinese enterprisesinvestment in Africa issued by the China-Africa Business Council， since 2000， the annual average growth of Chinese enterprises direct investment in Africa has exceeded 25%， becoming a driving force behind the inclusive economic development of Africa.

Zhuang Shangbiao， President of CRCC（China Railway Construction Corporation Limited）， said that CRCC was among one of the first groups of Chinese enterprises entering Africa. In the 1960s， CRCC engaged in the construction of the Tanzania-Zambia Railway：“Over the past six decades， CRCC has started conducting business in almost every African country. We have made important contributions to the economic and social development of Africa and have also achieved great business in Africa. At present， the total value of our projects in Africa has reached USD 70 billion， covering many fields including infrastructure， social welfare， education and health care.”

Alvaro Julio Masinge， Chairman of the Mozambique Chamber of Commerce， emphasized that Africa welcome Chinese investors. “We hope to attract more and more investors to invest in Mozambique in order to promote local industry upgrading and better leverage the water resources.”

In recent years， Chinese private enterprises have transferred some labor-intensive production links to Africa， which has driven the development of relevant industrial chains and cultivated a large number of upstream and downstream enterprises. According to the survey carried out by the China-Africa Business Council， approximately 50% of Chinese private enterprises have brought new products and services to the African market， and more than one third have invested in new technologies. These investments have clear technology spillover effects in the host country. In addition， technology transfer by the manufacturing enterprises to the local market has played a positive role in the industrialization of the host country.

With Chinas investment and cooperation in Africa increasing， industrial parks are becoming an important carrier and platform for Chinas investment and the most direct method of cooperation for supporting Africas industrialization.

The development model of industrial parks and economic development zones in China is very attractive to African countries. For Africa， inviting Chinese construction enterprises to supply electricity， water， roads and build factories in relatively concentrated areas， and then welcoming enterprises from all countries， especially Chinese manufacturing enterprises， to settle in the area is advantageous. This can not only build new infrastructure at a lower cost， but can also facilitate cooperation between both upstream and downstream enterprises in the park and improve the level of industrialization. Many African countries have formulated industrial park development plans and issued corresponding laws， regulations and policies.

Song Lei， Chairman of the China-Africa Development Fund， said that the China-Africa Development Fund has been deeply practicing the concept of green investment， has applied international standards regarding the environment， society and governance， has promoted the deep integration between project operation and local society， and has achieved green， low-carbon and sustainable development. “For example， we have invested in South Africas home appliance park project to provide energysaving refrigerators and smart appliances for local people. We have also brought the green standards and technologies of green appliances to Africa， and are actively using smart technologies to participate in the security design of local zoos， so as to protect the diversity of local animals. Another example is Ghanas power plant project， which has been operating stably using local natural gas resources for 10 years and currently supplies 15% of the electricity in Ghana. We also invested in the Huaxin Cement Project in Tanzania and have introduced the latest dust collecting technology， which can achieve a collection rate of 99.99%. The project also utilized waste heat power generation equipment to leverage the waste heat generated by the calcination of the factory kiln during power generation， which can meet half of the power demand of the factory and save a lot of energy.”

Ahmed Osman， Governor of the Central Bank of Djibouti， said that during the internationalization of the RMB， China and Africa should further cooperate in the investment field. African development should incorporate Chinese strategies and integrate with Chinas Belt and Road Initiative， in order to attract more Chinese investment and produce more financing cooperation programs.