China & Africa

Not many people know very well about this continent. If there is any association to it, it is very unlikely to be positive. Famine, civil wars, riots, killing, clashes are among common points that we hear from CNN and magazines. Despite such a bad publicity, China, another giant at the other side of the world, is raising its bet on it.

China’s trade with Africa has increased ten-fold over the past decade, as the rising Asian power has rapidly matured into a political and economic powerhouse. And with China still in the thralls of an epic growth spurt, its designs on Africa’s resources are beginning to conflict with those of the West.

Africa is blessed with abundance with natural resources – is shaping up to be the mostly hotly contested battlefield of the 21st century. Financial Times reported that China’s state owned CNOOC Ltd is in talks with Nigeria to buy 6 billion barrels of oil – equivalent to one-sixth of the country’s total proven reserves, which is likely to cost between $30 to $50 billion. It would put China at odds with western oil groups including Exxon Mobil, Royal Dutch Shell, Chevron Corp and Total SA, which partly or wholly control and operate the 23 blocs of interest.

With government backing, Chinese firms have been able to devote billions of dollars to the development of African resources. Chinese oil companies alone have announced plans to spend at least $16 billion to gain access to the continent’s energy assets.

China’s oil consumption has doubled in the last decade, soaring to 8 million barrels per day last year from 4.2 million barrels per day in 1998, according to BP Plc Statistical Review. China imported 3.6 million barrels per day last year, equivalent to about 45% of its needs.

Sinopec Corp in June agreed to buy Swiss oil explorer Addax Petroleum Corp for $7.24 billion in a deal that will give access to China to high potential oil blocs in West Africa and Iraq. And a month later, China’s largest oil refiner CNOOC agreed to purchase a 20% stake in an oil block offshore Angola from Marathon Oil Corp for $1.3 billion.

China is also making huge investments in Africa in exchange for large supplies of iron ore, nickel, copper, cobalt, bauxite, silver and gold. China has invested in 49 African countries, Chen Jian, vice minister of commerce told the China Daily.

However, China’s friends in Africa include President Omar Bashir of Sudan, who is currently wanted by the International Criminal Court for war crimes and Zimbabwe President Robert Mugabe, who has been accused of driving his country into economic ruin and starvation and is heavily sanctioned by the United States and European Union. China is also the largest supplier of arms to Sudan, which received $7 billion of Chinese defense exports between 2003 and 2007, according to US Department of Defense.