Getting together

• Author: Ulrich Jacoby
• Position: Senior Economist in the IMF's African Department.

The new partnership between China and Africa for aid and trade China is itself a developing country, but it is also fast becoming a major player in the development of sub-Saharan Africa (SSA). Its brisk growth and resulting hunger for oil and other commodities has propelled trade with resource-rich Africa, and Chinese companies are investing across the continent. Moreover, at a time when Africa is still waiting for the scaling up of aid promised by major industrial countries at the 2005 Gleneagles economic summit, China has already sharply stepped up its aid to SSA and recently pledged to do even more- remarkable from a country that is still among the top 10 recipients of official development assistance.

Huge rise in trade and investment

On the trade front, in 2005, SSA exports to China shot up to $19 billion, or 15 percent of the region's total exports, from some $5 billion in 2000 and negligible levels in 1990. This 30 percent annual growth since 2000 accounts for about one-fifth of SSA's total export growth during that period. The emergence of China as an important trade partner for SSA is most pronounced for fuels and raw materials. In 2005, China received one-fourth of SSA's raw materials exports and one-sixth of fuels in 2005; conversely, one-fifth of China's fuel imports came from SSA. Overall, China is now SSA's single largest Asian trading partner and its fastest-growing trading destination (see chart).

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SSA imports from China-most of which are manufactured products-also surged, from $3.5 billion in 2000 to over $13 billion in 2005, again almost 15 percent of total SSA imports.

On the investment front, Chinese state-owned companies often enter into joint ventures with SSA state-owned companies to secure sources of commodities. In Angola, the Chinese company SINOPEC is investing $3.5 billion in a partnership with Sonangol to pump oil from recently auctioned offshore blocks and plans to build a $3?billion refinery. In Gabon, the CMEC/Sinosteel consortium, financed by the Chinese Export-Import Bank, is investing about $3?billion in exploiting iron ore deposits; the plan is to construct a railway, a port, and a hydroelectric power station in return for exclusive rights to develop the mine. And in Equatorial Guinea, a subsidiary of the China National Offshore Oil Corporation (CNOOC)...