Saturday, July 24, 2010
Ghana-China trade exceeded $1.6 billion in 2009
Accra, July 23, GNA - Ghana- China bilateral trade exceeded $1.6 billion last year,Mr. Zhao Shiren, Charge D' Affaires at the Chinese Embassy in Ghana disclosed on Friday
He explained that a number of projects undertaken by Chinese enterprises in the country were over 400, calling for a better and closer Ghana-China cooperation.
Mr. Zhao noted that Ghana-China friendship had not only endured the vicissitude of time, but also consolidated and prospered.
He made this known at the end of an exhibition mounted by the Chinese Embassy to mark the 50 years of diplomatic relations between both countries.
The exhibition co-hosted by the Ministry of Foreign Affairs and Regional Integration and was on the theme: "Friendship, Cooperation and Development."
The event, attended by citizens of both countries and some members of the diplomatic corps, showcased historic photos from present to as far back as the 1960s, of some projects as well as government and private sector leaders, who blazed the trail of diplomatic relations between both countries.
"Over the last 50 years, people to people contacts have been further strengthened…the most recent example of Ghana actively participating in the Shanghai Expo 2010 by sending large trade delegation and the national dance troupe", Mr. Zhao added.
Alhaji Muhammad Mumuni, Minister of Foreign Affairs and Regional Integration, commended China on the remarkable transformation of their economy which has become the second largest destination for direct foreign investment in the world.
He said Ghana appreciates her unique relations with China and is committed to further deepening and strengthening existing warm bilateral ties as well as expansion and scope of economic and technical cooperation between the two countries.
Alhaji Mumuni therefore called on "Chinese businessmen to take advantage of Ghana's Export Free Zone Enclave, the on-going vast and encouraging oil exploration, excellent sea and air connection and improved infrastructural network to increase their importation of food items, horticultural produce, jewellery, handicraft and wood carvings, chocolate and knock-down furniture from Ghana in order to ensure a fair and balanced trade between our two brotherly countries".
Diplomatic relations between Ghana and China started in the early 1960s through the instrumentality of Ghana's first President, Dr. Kwame Nkrumah.
GNA
Changing dynamics of Chinese investment in Africa
Chinese investors in Africa, long used to low-interest policy loans, are being reluctantly pushed towards commercial lending as Chinese investment in the continent outpaces Beijing's willingness to take on risk.
Investors are unenthusiastic about the change, which generally means more scrutiny over each project. In turn, they also want more guarantees from African governments before committing to projects.
Chinese Premier Wen Jiabao meets African leaders in Egypt this weekend, with investment and aid projects high on the agenda. Chinese projects in Africa have traditionally been negotiated with the Beijing government's help, and funded with loans on preferential terms from state-owned banks that support government policy objectives. But private firms have poured into Africa in recent years, and even state-owned firms have exceeded the willingness of policy banks to lend.
"In the past, if the Export-Import Bank didn't support a project, there were no options," said Xing Houyuan, a director with the Chinese Academy of International Trade and Economic Cooperation, under the Ministry of Commerce, referring to one of the main providers of investment and trade credit financing.
"Now many more companies are interested in investing in Africa, and Ex-Im Bank can't possibly service them all. Africa is better now, so the risk is less. Foreign reserves have stabilised, and the investment environment is better."
China's direct investment in Africa, excluding the financial sector, rose 79% to $875-million in the first half of 2009, as Chinese companies built roads, ports, railroads, apartment blocks, mines and oil pipelines.
Total Chinese investment in Africa reached $26-billion by the end of 2008, according to Chinese figures.
Trade between China and Africa has also rocketed, driven by China's resource needs and growing African demand for cheap Chinese-made products. In 2008, total trade was $106,8 billion, up 45,1% on 2007.
An investment by the Industrial and Commercial Bank of China in South Africa's Standard Bank is helping drive the push towards market-oriented loans by giving a Chinese commercial bank a foothold in the continent.
China Merchants Bank is also wooing smaller Chinese enterprises with projects in Africa, Xing said.
"Right now there is much more interest from overseas investment funds and banks. But we must negotiate a lot and go through feasibility studies, since they are much more strict than Ex-Im," said an executive from a state-owned enterprise with a long-standing project in Africa.
"Country credit also becomes much more important. If the country is too risky, the banks may refuse to touch it," added the executive, who asked not to be named as he is not authorised to speak on behalf of the company.
To navigate the riskier environment of commercial loans for projects with no state guarantee, Beijing urges firms to hedge risk, for instance through credit insurance agency Sinosure.
The Chinese presence in Africa has led to Western worries about a centrally coordinated drive for influence in the resource-rich continent, despite the growing flurry of deals without overt government backing.
As an example of the type of non-transparent deals that raise alarm bells in Western capitals, the Hong Kong-based China International Fund, a major Chinese investor in Angola, is in talks for a $7-billion mining deal in Guinea even as rights groups condemn the military government's recent crackdown on opposition protesters.
Chinese companies in Africa run the gamut from state-owned firms with major government-to-government projects, to Chinese migrants' small shops, to entrepreneurial private companies with plenty of cash from China's boom.
Chinese firms that qualify for low-interest policy loans have three options. The Export-Import Bank backs traditional government-to-government deals and trade financing, while the China Development Bank has become more aggressive in funding resource projects as it shifts to a more commercial structure.
A third option is the China-Africa Fund, which backs any type of government-to-government projects, "big or small" including glass, medicine and cement plants, Xing said.
Many private companies invested in mines in Africa, but the drop in metals prices during the global economic crisis hurt their cash flow. Many, especially in Congo, just left while others sat on projects, waiting for cash to flow again.
"If there's no strong financing then they are unable to carry out their investment commitments, especially during those years when they are bleeding money," the executive from the state-owned firm said, adding that many private firms have no exit strategy.
Companies which are being weaned from policy loans, but don't want to fund projects with cash, are becoming more cautious about committing to African investments, a banker in Beijing added.
They try to gain political cover by including their deals in packages announced during visits by Chinese officials, helping announced Chinese investments to balloon into billions of dollars.
"They hope to squeeze into the government package in order to reduce the resistance they might encounter," Xing said.
"At least it shows that the host government in general is supportive of the project, although it is not a guarantee."
- Reuters