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China tightens grip on Africa's resources

March 27, 2013 at 5:45 PM   |   Comments

JOHANNESBURG, South Africa, March 27 (UPI) -- China's new President Xi Jinping is touring Africa, underlining the mineral-rich continent's strategic importance for Beijing in its relentless drive to acquire vital resources like oil, natural gas and copper in return for massive investment.

China's success in Africa and its recent expansion of operations into the Middle East and Latin America, has led some U.S. lawmakers and business leaders to warn that this is undermining U.S. objectives and influence in a region riding high on an oil and gas bonanza.

Xi is making his first foreign tour since he succeeded Hu Jintao as China's head of state this month. He arrived Sunday in Dar es Salaam, capital of Tanzania, where he inaugurated a $10 billion port project. It will be linked to an industrial zone designed as a hub for trade between East Africa and Asia.

Xi declared Beijing would make good on a 2012 pledge to provide $20 billion in loans over three years for African infrastructure development, agriculture and businesses.

It's through these kinds of massive infrastructure projects that the Chinese are making major inroads into Africa, where the lack of rail networks, highways, airports, factories, power plants and oil refineries has slowed the continent's economic development so badly since the colonial era of the 1960s.

In this way, the Chinese also provided the infrastructure it needs to develop the oil fields and vast deposits of copper and uranium that it seeks to exploit.

Power generation projects have priority, with some $5.3 billion invested in Ghana alone, including the $660 million Bui Dam. Ethiopia, Angola, Sudan and Nigeria -- the last three major oil suppliers to China -- are also key beneficiaries.

Oil and coal accounted for 50 percent of China's imports from Africa in 2012, minerals and other raw materials made up most of the rest.

Overall Chinese trade with Africa was nearly $200 billion for the year, a fourfold rise in six years.

Tanzania, along with neighboring Mozambique, is in the forefront of an East Africa natural gas boom that could transform the underdeveloped region into an energy powerhouse ideally placed on the Indian Ocean to export to energy-hungry China, as well as Japan and India.

China, the world's leading energy consumer, was quick to move in on that enterprise.

It offered to build a 332-mile gas pipeline to link the gas fields in the south to the main port of Dar es Salaam, even though there isn't yet the gas to fill it or any plan to sell what little is actually being produced now.

China is making these huge investments in oil, mining and construction through the China Export-Import Bank, its financing arms in Africa.

Meantime, the China National Petroleum Corp. this month acquired a 20 percent stake in the offshore gas project, believed to be one of the world's biggest untapped fields, operated by Italy's Eni and worth $4.21 billion.

Xi later flew to South Africa, where he attended the fifth annual BRICS summit of the world's major emerging economies -- comprising Brazil, Russia, India, China and South Africa -- in Durban Tuesday.

He ends his tour with a two-day visit to the Democratic Republic of Congo starting Thursday.

China's economic juggernaut has begun making waves in Africa, with senior economists complaining Beijing's engaged in what Nigeria's central bank governor Lamidu Sanusi calls "a new form of imperialism."

"China takes from us primary goods and sells us manufactured one," he wrote in the Financial Times. "This was also the essence of colonialism."

Xi has sought to calm such concerns but the flood of cheap Chinese goods has triggered a sharp downturn in Africa's manufacturing sector.

Sanusi, echoing a growing chorus across Africa, noted: "China is no longer a 'fellow underdeveloped country.

"China is the second biggest economy in the world, an economic giant capable of the same forms of exploitation as the West. China is a major contributor to the de-industrialization of Africa and thus African under-development."

The Chinese juggernaut's also causing concern in Washington.

"America is losing ground and ceding economic opportunities in Africa to competitors," U.S. Sen. Chris Coons, (D-Del.), chairman of the Senate Foreign Relations Subcommittee on African Affairs, warned March 7.

This, he said, "should serve as a wake-up call for enhanced American trade and investment" in Africa.

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