Chinese workers from the Zhongyuan Petroleum Exploration Bureau of Sinopec and Sudanese workers read cartoon books in an oilfield in South Sudan on October 27, 2010. Photo: IC

 
Some overseas companies have expressed concern about China's increasing investment in Africa, but officials in Africa have said they hope for a closer relationship with the world's second-largest economy.

"Why should we be afraid of China? Problems in Sino-African cooperation can be solved through negotiations," Daniel Kablan Duncan, prime minister of Cote d'Ivoire, was quoted as saying Wednesday by xinhuanet.com.

He was speaking at the 13th International Economic Forum on Africa organized by the Organization for Economic Co-operation and Development (OECD) and held on October 7 in Paris, xinhuanet.com reported.

Carlos Lopes, executive secretary of the UN Economic Commission for Africa, also expressed hopes for greater investment from China in Africa, as the amount of foreign direct investment (FDI) from China into Africa currently accounts for less than 4 percent of China's FDI worldwide, the report said.

Chinese firms are continuing to make big investments in the continent, including State-owned energy firm China Power Investment Corp. The company reached an agreement with the government of Guinea in early September to build an alumina production base in the country.

The company plans to invest 39 billion yuan ($6.38 billion) in the first phase of the plant and supporting facilities including a bauxite plant, an exclusive port, a coal-fired power plant and ore pipeline, Shi Mingwei, general manager of CPI International Minerals & Investment Co, a subsidiary of China Power Investment Corp, told the Global Times on September 27. 

Diversified investment

China has become Africa's largest trade partner since 2009. The total volume of China-Africa trade grew at 19.3 percent year-on-year to $198.5 billion in 2012, increasing its proportion in China's total foreign trade volume to 5.13 percent from 2.23 percent in 2000, according to a white paper published at the end of August by the State Council.

By the end of 2012, more than 2,000 Chinese firms had invested in more than 50 African countries and regions, with a cumulative FDI of over 20 billion yuan, the white paper said.

Despite focusing on energy and resources, Chinese investment in Africa has also diversified in recent years, into areas such as infrastructure projects, Liang Ming, a research fellow with the Chinese Academy of International Trade and Economic Cooperation affiliated to the Ministry of Commerce, told the Global Times Wednesday.

In 2012, Chinese firms' completed construction contracts in Africa increased by 45 percent compared to 2009 to $40.8 billion, accounting for 35 percent of the country's contracted overseas work completed, the white paper said.

After completion, CPI International's alumina project in Guinea will provide electricity to surrounding areas, Shi said.

Many African countries suffer power shortages, Shi said, noting that the company plans to build more electric power stations in Africa.

Another energy company Power Construction Corporation of China began to construct the first coal-fired power plant in Zambia last year.

The project will help to relieve Zambia's power shortages and achieve self-sufficiency in terms of electricity for the country, cpnn.com.cn reported Saturday, citing Christopher Yaluma, Zambia's minister of mines, energy and water development.

During a six-day tour to Africa in March, Chinese President Xi Jinping pledged to provide $20 billion in loans for African countries from 2013 to 2015 to strengthen bilateral cooperation in agriculture and manufacturing. 

China's agricultural exports to Africa grew to $2.49 billion in 2012 from $1.58 billion in 2009, up 57.6 percent, according to the white paper.

China's total investment in manufacturing in Africa reached $1.33 billion in the 2009-2012 period, the paper said.

In 2006, China set up the China-Africa Development Fund, a PE fund focusing on investment in Africa.

The fund has invested in 60 projects in more than 30 African countries so far, with investment of $10 billion by Chinese firms, xinhuanet.com reported in September, citing Wu Guohua, general manager of the Africa investment department of the fund.

China has also taken measures such as zero-tariff treatment for several African countries, and it is expected that the bilateral trade volume will reach a record high of $237.98 billion in 2013, Liang said.

Overcoming obstacles 

Chinese investment in Africa faces certain obstacles, such as insufficient knowledge of local laws and regulations. Regional turmoil can also be a problem, such as the recent situation in Libya, Liang said.

Guinea has had four presidents since China Power Investment Corp began working on the alumina project in the country in 2008, but the country's political situation has improved, Shi said.

It's also a challenge to get local people to understand and support the project, Shi said, so the company has made efforts to boost "standardization, transparency and communication," he noted.

His company tried to learn about and abide by international standards, and publishing an environmental assessment of the project on its website.

Staff members of the company have been to almost every town in the Boffa region where the project is located to tell people about its economic and environmental effect, Shi said.

Localization is another important strategy for firms investing in Africa. "Some effectively localized projects have gained high popularity by offering local jobs and contributing to local medical care and social security," Liang said.

A mine project in Zambia by China Nonferrous Metal Mining Co is a good example, as the company opened several hospitals in the country to provide cheap medical care for local workers, Liang noted.

Shi also noted that his firm has begun recruiting and training local staff for the Guinea project, which will offer at least 3,000 jobs for local residents by 2025.

An Ethiopian worker at Chinese footwear manufacturer Huajian Group's local factory (in the country) told People's Daily in May that her salary reduces the family financial burden and the job also offers learning opportunities.

Siphamandla Zondi, director of the South Africa-based Institute for Global Dialogue, was quoted in the report as saying that agreements signed during Xi's visit on investment and training of professionals in Africa will boost further development of the continent.