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Africa heading for 2009 growth due to China-expert

Published 10/26/2009, 08:12 AM
Updated 10/26/2009, 08:15 AM

* Africa, bar South Africa, to grow this year

* Growth based on Chinese commodity and energy demand

* China faces investment, trade protectionism elsewhere

By Jonathan Lynn

GENEVA, Oct 26 (Reuters) - All African economies bar South Africa will grow this year because of China's demand for their raw materials, a leading South African analyst said on Monday.

Out of 53 African states only the continent's biggest economy, South Africa, will not grow this year, Martyn Davies, executive director of Stellenbosch University's Centre for Chinese Studies, told a conference.

"Chinese demand is underpinning African growth," he told the conference on China, organised by the International Centre for Trade and Sustainable Development (ICTSD).

Africa is already exporting 1 million barrels per day of oil to China, accounting for 25 percent of China's foreign energy supplies, said Davies, who is also chief executive of emerging market investment strategist Frontier Advisory.

These links are based on strong support by African leaders for Chinese investment in extractive industries -- in contrast to objections raised to Chinese investment in sensitive sectors in developed countries, he said.

China's engagement in Africa -- where it is the biggest trading partner -- reflects both state enterprises benefiting from preferential capital from state banks, and private entrepreneurs, of whom around 1 million may now be in Africa, he said.

China's export prowess has so far failed to provoke much protectionism in Africa, except, again, in South Africa, where sensitive labour-intensive sectors such as textiles and light industry compete with Chinese firms.

Chinese imports from Africa come in at an average tariff of 0.64 percent -- almost the duty-free level sought by developing countries in rich markets -- because of China's eagerness to facilitate imports of African energy and commodities.

Conversely, China faces considerable protectionist sentiment outside Africa, said Simon Evenett co-director of St Gallen University's Centre for Economic Policy Research.

According to Global Trade Alert, a website run by academics that Evenett co-founded, China is now the most targeted country for trade measures such as anti-dumping duties and safeguards, a trend likely to increase as the global economy and international trade recover, Evenett told the conference.

"They can expect to be targeted even more. Now that world trade flows are increasing is perversely going to make it easier to demonstrate that Chinese imports are causing injury," he said.

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