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In BusinessDay SA:

CHINA’s renminbi could replace the dollar as the main currency to finance trade between Chinese and African countries, research by Standard Bank shows.

In a sign of China’s growing influence as Africa’s largest trading partner and investor, Standard Bank estimated that up to 40%, or $100bn, of China’s trade would be denominated in renminbi by 2015.

This amounted to more than the total Sino-African trade last year, the bank’s Beijing-based economist Jeremy Stevens said in a research paper released yesterday .

“In addition, at least $10bn of Chinese investment in Africa will be denominated in renminbi over the same period,” he said.

The Chinese currency already accounts for 13% of the South African Reserve Bank’s trade- weighted exchange rate for the rand, making it the third most important currency in the basket. Mr Stevens said China had no intention of “dumping” the dollar, but merely wanted to broaden its currency’s geographical reach and allow the renminbi to be used for investment purposes.

“The change, which will be gradual, is symptomatic of a more multi polar world,” he said.

The bulk of China’s estimated $3,2-trillion in official reserves was still dollar-denominated, including $1,1-trillion in US Treasury bonds .

However, the use of the renminbi showed that many companies, including some in SA, were becoming comfortable transacting in the currency, Peter Sun, Standard Chartered Bank’s MD of transactional banking, said last week.

Here. H/T to Howard French on G+

… could have been the title of a detailed piece by The Economist on the actions of the Chinese Queensway Syndicate in Africa:

The syndicate is built on links forged during the cold war. It is largely the creation of a man known as Sam Pa. Though he uses several names, he was born Xu Jinghua. After attending a Soviet academy in Baku four decades ago, say people who have looked into his career, he traded with Angola during its civil war, which lasted from 1975 to 2002 and over the years was a proxy battleground for several outside powers, including China, America, Cuba, the Soviet Union and South Africa. Mr Pa is a private and rarely photographed person. His name appears in few syndicate documents. He is believed to exert control through Veronica Fung, who may be a member of his family. She controls 70% of a core company, Newbright International. The two frequently travel in Africa, using the syndicate’s fleet of Airbus jets. They are said sometimes to bypass customs.

They are in Angola, Guinea, and Zimbabwe, but surprisingly not in Nigeria or Sudan. From the information that is available, Chinese involvement in the Nigerian oil sector is fairly minimal, mainly because the industry is mature in Nigeria, and most of the stakes are already owned by European (Shell and Total) and American (Chevron and Exxon-Mobil) companies. It is harder to explain the Sudanese case. Read the whole piece here.

China will put up 10 ICT-driven model primary schools in Kenya as part of a project that aims at constructing 1000 such schools across the African continent.

Source.

The Chinese market in fake European classical art is growing. Steadily. Something they bring to it? Industrial efficiency.

The village of Dafen in southern China has become the centre of a big industry, with about 8,000 artists responsible for creating 60 per cent of the world’s oil paintings.

Deborah Brautigam thinks so. And she should know, since she recently wrote a book on China in Africa, titled The Dragon’s Gift: The Real Story of China in Africa. She said this in an interview with the Aid Watch blog:

As a donor, China’s way has several advantages. Take the way they operate. They rarely “poach” skilled staff from African ministries to work in their own offices. The focus on turnkey infrastructure projects is far simpler and doesn’t overstretch the weak capacity of many African governments faced with multiple meetings, quarterly reports, workshops, and so on. Their experts don’t cost much. In addition, their emphasis on local ownership is genuine, even if it leads to projects like a new government office building, a sports stadium, or a conference center. They understand something very fundamental about state-building — something that Pierre L’Enfant understood in 1791 when he teamed up with George Washington in newly independent America:  new states need to build buildings and dignity, not simply strive to end poverty.

Read the full interview here. I also learnt from Aid Watch that she now writes a new blog, China in Africa: The real story. The blog tells readers to, ‘Stay tuned for analysis of China’s “land grabs” in Africa, the China International Fund in Guinea and Zimbabwe, and so on.’

Part of the anxiety over China’s presence in Africa comes from the challenge they pose to traditional ideas about aid. The Chinese operate with low costs compared to Western aid projects that pay high salaries to foreign experts and put them up in fancy hotels. A 2008 Oxfam study, for example, estimated that donors to Mozambique hire 3,500 “technical experts” at a cost of $350 million per year, an amount that could provide 400,000 local salaries. While Chinese projects do import labor and management, workers live in simple housing and are paid modest salaries, minimizing overhead and allowing the Chinese to greatly underbid Western donors. The Chinese also avoid imposing restrictions on their zero-interest loans for infrastructure, preferring to give African governments agency and complete buy-in. They do not demand economic or democratic reform, and they invest and emphasize profitability in sectors that have been all but abandoned by traditional donors — the messy business of industrialization is not on the agenda of the Millennium Development Goals.

The whole review, by Angilee Shah.

H/T Vernant

Mugabe “thanked the Chinese embassy for its painstaking preparations for the birthday celebration and … hoped to further expand friendly cooperative relations in every field between the two nations”, the foreign ministry said.

The ministry’s website (www.mfa.gov.cn) showed pictures of Mugabe cutting a birthday cake in front of a large sign wishing him “Happy 86th birthday” and addressing almost 100 guests.

Really, no kidding.

How exactly do Chinese loans to African countries work?

[China's] current experiment in Africa mixes a hard-nosed but clear-eyed self-interest with the lessons of China’s own successful development and of decades of its failed aid projects in Africa.

The first prong of Beijing’s efforts is to offer African states resource-backed development loans, an initiative inspired by its experience at home. In the late 1970s, eager for modern technology and infrastructure but with almost no foreign exchange, China leveraged its natural resources — ample supplies of oil, coal, and other minerals — to attract a market-rate $10 billion loan from Japan. China was to get new infrastructure and technology from Japan and repay it with shipments of oil and coal. In 1980, Japan began to finance six major railway, port, and hydropower projects, the first of many projects that used Japanese firms to help build China’s transport corridors, coal mines, and power grids.

Since 2004, China has concluded similar deals in at least seven resource-rich countries in Africa, for a total of nearly $14 billion. Reconstruction in war-battered Angola, for example, has been helped by three oil-backed loans from Beijing, under which Chinese companies have built roads, railways, hospitals, schools, and water systems. Nigeria took out two similar loans to finance projects that use gas to generate electricity. Chinese teams are building one hydropower project in the Republic of the Congo (to be repaid in oil) and another in Ghana (to be repaid in cocoa beans).

That is Deborah Brautigam of American University writing in Foreign Affairs. (When I was thinking of researching informal trade among the Igbo – which is what my PhD is partly about – I read an article she published in 2003, on Chinese business networks as catalysts for the movement of Igbo entrepreneurs from trading in auto spare parts to manufacturing them in Nnewi, southeastern Nigeria).

The concluding paragraph of the Foreign Affairs article:

While the West supports microfinance for the poor in Africa, China is setting up a $5 billion equity fund to foster investment there. The West advocates trade liberalization to open African markets; China constructs special economic zones to draw Chinese firms to the continent. Westerners support government and democracy; the Chinese build roads and dams. In so doing, China may wind up supporting some dictatorial and corrupt regimes, but — and this is an inconvenient truth — the West also supports such regimes when it advances its interests. And given the limits of the West’s success in promoting development in Africa so far, perhaps Westerners should be less judgmental and more open-minded in assessing China’s initiatives there.

The whole article is here.

is China. According to a report in The Wall Street Journal, China overtook Germany in 2009:

China took over the mantle of the world’s top merchandise exporter from Germany in 2009, according to the latest figures, aided by a global economic crisis that has taken a greater toll on other trading powers.

China exported $957 billion of goods in the first 10 months of 2009, compared with $917 billion for Germany, according to customs data compiled by Global Trade Information Services, a Geneva-based firm.

No changes in November or December are expected to overturn the Chinese lead, trade experts say. China is likely to publish trade figures for the full year next week.

China’s claiming of the title of world’s largest exporter was widely expected, with annual growth in its exports regularly exceeding 20% during the past decade.

China in 2007 overtook Germany as the world’s third-largest national economy, and is on track to soon surpass Japan to become the second-largest economy after the U.S.

“China has been growing much more rapidly than Germany on all sorts of dimensions and has a population of 1.3 billion, while Germany has 83 million,” said Douglas Irwin, a professor at Dartmouth College.

China’s ascendancy has been accelerated by the international financial crisis, from which it has suffered less than other major economies. Continue reading.

Commentary on the same WSJ article in Der Spiegel.

Niall Ferguson, in Financial Times, ascribes the rise of the West in the past 500 years to “six killer apps”:

the capitalist enterprise, the scientific method, a legal and political system based on private property rights and individual freedom, traditional imperialism, the consumer society and what Weber probably misnamed the “Protestant” ethic of work and capital accumulation as ends in themselves.

And how is China faring?

Some of those things (numbers one and two) China has clearly replicated. Others it may be in the process of adopting with some “Confucian” modifications (imperialism, consumption and the work ethic). Only number three – the Western way of law and politics – shows little sign of emerging in the one-party state that is the People’s Republic.

But does China need dear old democracy to achieve enduring prosperity?

The full article.