China tightens its grip on Africa

SHARM EL-SHEIK, Egypt, Nov. 11 (UPI) -- China's weekend pledge of $10 billion in low-interest loans to African nations, on top of its recent cancellation of some African debt, takes Beijing another step toward its long-term strategic goal of pulling the continent, with its vast mineral wealth, into its orbit.

Prime Minister Wen Jiabao's promise at the start of a summit of the Forum on China-Africa Cooperation in this Egyptian Red Sea resort Sunday and Monday capped a recent surge of Chinese acquisitions across Africa, particularly along the western seaboard that these days is riding an emergent oil boom.

But business analysts believe Beijing is not simply seeking to scoop up oil and gas supplies and raw materials for China's mushrooming resource-hungry economy.

The Chinese also want to invest in African nations, long despised by the West as a collective economic basket case, to produce wealth that will eventually open up vast new markets for Chinese goods and services while largely excluding other industrialized states.

According to a Time magazine analysis, "China has caught on to something that eludes most governments and companies in the West.

"Chinese state-owned and private enterprises believe African consumers could be the great untapped gold mine.

"Beijing's engagement with African leaders and governments is increasingly about ensuring that Chinese firms are best placed to sell their products when Africans start buying."

This is a far cry from the Cold War era where East and West vied for political influence in Africa, providing vast arsenals of weapons to client regimes and liberation movements that became the proxies of the rival ideologies.

Now the new rivalries are all about business.

According to Time, there are between 50 million and 150 million "economic elites in Africa with similar spending to middle classes in the West."

"Most importantly, there are 350 million to 500 million people in the African aspirational classes -- from households with stable jobs -- that resemble counterparts in China and India being courted by Western firms.

"These African aspirants drink Coca-Cola, want mobile phones and yearn to own a car or motorcycle. The West focuses on the bottom half of Africans living in appalling poverty; Beijing is looking at the other half."

China's Western rivals complain that Beijing is investing with unsavory African regimes, holding back human rights and transparent governance. Beijing responds that Western and Japanese companies do the same themselves if they find the arrangements profitable.

But the Chinese are making accelerating headway by agreeing to fund all manner of infrastructural projects, from building railroads to affordable housing, airports, highways and factories, in return for locking up access to oil, gas and other vital resources that include bauxite, copper and diamonds.

And here the Chinese have a crucial advantage: plenty of spare cash, unlike their rivals in the recession-battered West.

The Chinese companies, both private and those owned by the state, are aided by such enterprises as the Export-Import Bank of China, which funds many of the country's major foreign investments, and access to China's decision-making elite.

Among the best-connected is the Hong Kong-based China International Fund, which has concluded major multibillion-dollar deals in Angola and Guinea recently. It's a private company, but its ownership is not clear.

Beijing has also roped in European veterans of Africa's often murky business environment, mostly from the former European colonial powers like France, Portugal and Britain.

These wheeler-dealers prefer working with the Chinese, who are not under the same restraints as their American counterparts, who often have no access to Africa's largely autocratic decision-makers.

For instance, Sinopec and China National Offshore Oil Corp., two of China's three state-run oil giants, have enlisted the services of Portuguese banker Helder Bataglia, head of Espirito Santo Commerce, the Angolan affiliate of the Portuguese bank Espirito Santo; and Pierre Falcone, a Franco-Brazilian entrepreneur who has lately been operating out of Shanghai.

They both have close connections with the government of Angola, a former Portuguese colony in West Africa that is now one of the major sub-Saharan oil producers.

Falcone has been accused of dealing in illegal arms and was sentenced to six years in prison by a French court in October for masterminding a gun-running operation to Angola during its civil war in the 1990s that involved several prominent Frenchmen.