Where China’s investing

Statistics shmutistics... while the research apparently says China doesn’t invest disproportionately in resource-rich African countries, a top four of DR Congo (minerals), South Africa (coal and iron ore), Nigeria (oil) and Niger (uranium, and a fresh coup) makes me dubious.

Note also that Australia is number one overall (e.g. here, here, here).

By the way, critical mass has inspired me to add a new label for China in Africa.

Update: OK, on second thought... how is "aid" defined here? If narrowly, then perhaps I buy that Chinese aid specifically is not targeted toward resource-rich Africa countries... but who's to say where building a road, a railroad, a port, an airport becomes investment rather than aid? Building infrastructure frankly has more economic impact than most other foreign aid anyway, in all likelihood.

Update 2: Speaking of Niger, cannot help but pass on this outstanding haiku:

Another colonel
Thinks it’s his turn to spring clean
The big boss – hi coup!

China and African resources

Apparently lots of folks (me included) are guilty of parroting the conventional wisdom on China's actions in Africa... which turns out not to stand up to scrutiny.

A few examples of China myths and partial truths:

1) China targets aid to African states with abundant natural resources and bad governments

Actually, China gives money to almost every single country in Sub-Saharan Africa, excluding only those that don’t acknowledge the One China policy. There is little evidence that China gives more aid to countries with more natural resources or specifically targets countries with worse governance. [emphasis mine] China is not alone in its interest in natural resources in Africa, and natural resources are not the primary motivating factor for Chinese aid: like all donors, US definitely included, China is motivated to give aid by a mix of political, commercial, and social/ideological factors.

Via Aid Watch.

Update: Or not?

Not so fast

Looks like Exxon’s Jubilee bid isn’t a done deal yet, with talk of a counterbid from China’s CNOOC and discontent within the Ghanaian government and national oil company.

China National Offshore Oil Corp. is in advanced talks with the Ghana National Petroleum Corp. to make a rival bid challenging Exxon Mobil Corp.'s $4 billion offer for a stake in a giant oil discovery off of West Africa, said people familiar with the matter.

A GNPC-Cnooc bid, which one person said "will be competitive to what Exxon has offered," reflects both the Chinese government's desire to secure access to more of the world's oil and the Ghanaian government's to be a larger participant in the discovery, known as Jubilee.

News of the Exxon agreement infuriated the Ghanaian government and GNPC, which had been trying to negotiate to increase its 13.8% stake in the field. "I don't see the Exxon-Kosmos deal as done," said GNPC chief executive Thomas Manu said in an interview this weekend. The Ghanaian oil minister also expressed his unhappiness with not being notified that Kosmos had made a deal with Exxon and said he believed the country had the right to block the offer.

Kosmos thinks it can sell to anyone, but even with Ghana attempting to hold itself to a higher level of sophistication and investor friendliness, it would be unwise to count out the host government so soon. (That said, Blackstone and Warburg will probably still make out like bandits.)

This is also getting boringly repetitive, but China is really leaving no stone unturned in its quest to secure resources in Africa, Guinea being the latest target (or beneficiary, depending on how you view it and whose interests you're rooting for).

Hungry China

China's voracious appetite for resources continues unabated: securing a $41bn natural gas deal in Australia, restarting oil exploration in São Tome and Principe off the West African coast, and apparently even hoarding rare earth metals.

Update: Apparently the China doesn't have a complete monopoly on rare earth metals, as the linked article suggested - a California mine appears to be reopening and other potential sites and Canada and Australia are being investigated.

Africans in China

There's a lot of talk about China going to Africa, but the reverse is happening as well:

Based on official statistics, since 2003, the number of Africans in Guangzhou has been growing at 30-40% annually. Based on a report in the Guangzhou Daily, there might already be 100,000 in the community. They come from Nigeria, Guinea, Cameroon, Liberia, and Mali. Amongst these, Africa’s most populous country Nigeria claims first place.

They primarily live in village-districts in the city of Guangdong (like Dongpu, Dengfeng Jie, Yongping Jie). They do their business in a few large-scale China-Africa commerce malls.

Mutual trust has a lot to do with the cohesion of the community:

Africans especially trust, and depend on their fellow people; that’s why we call each other ‘brother’ and ’sister’.” Mall management Chen Lianren told the reporter that every store opened by an African becomes a focal point, and attracts many of his fellow countrymen, increasing the traffic flow for other stores in the mall. For that reason, they lowered the rent for African tenants.

I think anyone who has lived as an expat can relate to this - a compatriot you might not necessarily trust absolutely at home appears in a totally different light in a foreign setting where no one else speaks your language.

Williams and other Africans with an economic foundation all share a “Chinese Dream”. They hope that by struggling for 4-5 years, they will be able to open a trade company or service center, and make large profits from servicing the rapidly growing Chinese-African trade. Based on published research, more than 20,000 Africans are long-term residents in Guangzhou (more than six months).

That the pull is economic is not surprising to me, but the magnitude is. I guess if motivations are economic, totally understandable why one would pick China over Europe or the U.S.

Via MR.

There's no competition here

While China was ostensibly not on Hillary Clinton's mind for her recent visit to Angola, it doesn't seem far from the latest U.S. energy move in Latin America.

The U.S. government is prepared to provide up to $10 billion in loans to finance the development of massive hydrocarbon reserves off Brazil’s coast, a Brazilian official said Wednesday.

...

The loan is equal in value to a similar credit line agreed to with the China Development Bank, also for exploiting Brazil’s “pre-salt” area, so-named because the estimated 80 billion barrels of high-quality crude in that new oil frontier lie far beneath the ocean floor under layers of rock and an unstable salt formation.

In any case, China is not waiting around, judging from the strange news that China may be readying a bid for YPF Repsol's declining Argentine assets.

Angola: Africa's new oil giant

We tend to think of Nigeria as the major producer of oil in Africa, but major unrest has diminished its output even as new discoveries have pushed Angola into the number one spot:

Chevron's latest find marks the latest in a flurry of discoveries off Angola in the past few years that have made it Africa's biggest oil producer, with output of around 1.85 million barrels a day in July.

That title used to belong to Nigeria, but a constant flow of militant attacks the past three years on oil infrastructure have knocked out about 20% of Nigeria's output capacity.

Angola's emerging importance was underscored by U.S. Secretary of State Hillary Clinton's recent visit, which had an "unusual" focus on energy security.

China was not officially on the agenda:

"I'm not looking at what anyone else does in Angola," she said.

... but somehow I find that hard to believe.

Update: According to a new report, Western oil majors are still in charge in Angola and Nigeria:

“More importantly, the oil majors remain the leading players in both countries,” said the report, which focuses on Nigeria and Angola. “They dominate production and hold the majority of reserves.”

Rather than challenge the leading Western energy producers, companies from China, South Korea and India, “latecomers to West Africa,” have become rivals for hydrocarbon interests in the two countries, the report said.