The Chinese government may have high-profile political and strategic reasons for seeking closer ties with Africa, but its companies are on the continent mostly for the money, analysts say.
A case in point is the move by the Industrial and Commercial Bank of China (ICBC,
"Chinese companies of course operate as economic entities, and they very much pay attention to the bottom line," said Barry Sautman, a specialist on Sino-Africa ties at the Hong Kong University of Science and Technology.
"They're not usually driven by political orders. Instead, they are driven by economic opportunities and the action on the part of this Chinese bank in terms of investing in Standard Bank is driven precisely by that consideration," he said.
China increasingly sees Africa as the land of new opportunity. Bilateral trade was US$55.5 billion last year, 10 times the volume of less than a decade ago.
It is against this backdrop that ICBC's surprise deal, announced late last week, makes sense, as it gives it access to Standard Bank's comprehensive network of 713 branches in South Africa and 240 on the rest of the continent.
"ICBC's cooperate clients, both large and small, have many investments in Africa. It would be good for ICBC to have a foothold there," said Yukkei Lee (李玉麒), a Hong Kong-based analyst with Core Pacific Yamaichi (京華山一).
But this is China and the players are different.
It is hard to say where economics ends and politics begins -- and ICBC remains majority-owned by the government.
Similarly, it is hard to pin down the primary motive that drove China to sign a deal last month to loan US$5 billion to the Democratic Republic of the Congo to develop infrastructure and mining.
"In China it's virtually impossible to truly separate commercial interests from political decisions," said David Marshall, a Hong Kong-based analyst with Fitch Ratings.
"[There is] extremely close linkage in terms of ownership and personnel between the Chinese large state-owned companies, including the state-owned big banks and the Chinese government. Essentially they are all run by individual senior members of the Communist Party," he said.
However, the clear economic rationale for ICBC's agreement with Standard Bank serves as a reminder that China's interest in Africa is not only based on the thirst for oil or the need to maintain diplomatic allies.
China's activities in Africa have always been multifaceted, encompassing both political and economic objectives for the past half century, academics argued.
"History shows that Africa needs us and we need Africa," said Jiang Zhongjin (姜忠盡), a professor at the Center of Africa Studies at Nanjing University.
"But our basic principle is to take care not to hurt each other's interests, and let both sides make money," he said.
What has changed and made China more visible is its growing economic muscle, reflected in foreign exchange reserves now surpassing US$1.4 trillion.
"We should understand the reasons why China is interested in Africa," said Jean Marie Cishahayo, a Shanghai-based consultant.
Polytronics Technology Corp (聚鼎科技) yesterday announced that it is buying Henkel AG’s thermal clad dielectric material (TCLAD) business division for US$26 million as the Taiwanese firm aims to improve its technology, product portfolio and revenue performance. Polytronics, headquartered in the Hsinchu Science Park (新竹科學園區), is a supplier of protection components and heat dissipation materials. The firm entered the metallic heat-dissipation substrate market in 2007 and developed a unique solventless production process. Its board of directors approved signing an agreement with Henkel to acquire the German chemical firm’s TCLAD division in the US. The purchase includes all assets and business interests, including equipment,
SIZE MATTERS: Medium-sized hotels that do not have the support of parent groups are more vulnerable and are forced to take action, a REPro Knight Frank researcher said About 50 hotels across Taiwan are seeking to exit the market as they succumb to the bleak business outlook amid international travel restrictions imposed to combat the COVID-19 pandemic. Yomi Hotel (優美飯店) on Minsheng E Road, Sec 1, in Taipei is seeking to transfer ownership with an asking price of NT$950 million (US$32.15 million) and a pledge for a lease contract that guarantees a 3 percent return. The budget hotel, with room rates that start from NT$1,400 per night, maintains normal operations, but has been struggling since March, when the government placed restrictions on inbound and outbound travel. Occupancy rates for hotels in
With the US dollar expected to weaken in the next 12 months due to near-zero interest rates, investors should consider purchasing US corporate bonds, Standard Chartered Bank Taiwan Ltd (渣打台灣銀行) said on Thursday. The bank said that the US Federal Reserve since last month has been buying bonds issued by US companies to curb default rates. The US dollar is forecast to be weaker against the pound, the euro and the yen, as well as the Canadian dollar, the Swedish krona and the Swiss franc, as the greenback lacks high investment returns after the Fed in March slashed the benchmark interest rate
A Bollywood actor’s face tattooed on his arm, Sandeep Bacche’s devotion shocks few in India where stars enjoy semi-divine status, but even there the hallowed silver screen might be losing its shine to streaming services and pandemic fears. “Whenever things get better and theaters begin operations, I will watch three movies a day for sure just as a way to celebrate,” said the Mumbai rickshaw driver, who is recovering from the virus himself. However, others might not join the party. With cinemas shut for months due to a COVID-19 lockdown, and little prospect they will reopen soon, frustrated Bollywood producers have turned to