Day 4
The Mining Day officially ended today but the deal making and networking will not end today. I spent more time doing some networking of my own in the Exhibitors Hall and I was collecting business cards like the bonus round of Super Mario Land on Nintendo. Remember that? The atmosphere at the Exhibitors Hall was good, people were still talking business, I even saw some contracts being signed at the Canadian stand. However, some people seemed tired and I can understand that. It’s been a long week and somewhat taxing as the mood was sombre at best. I can safely report that the Mining Indaba was a success even in the current “Things are bad” space.

My highlight of the week has to be the China story. So I would like to dedicate what maybe my final piece on the Mining Indaba 2009 to China and what it means to the world and to Africa.

China Day
So as you may or may not know, China is a really big deal not only in Kung Fu films but in everything else. China has been one of the fastest growing economies in the world for a long time. I knew that China was one of the largest consumers of African resources but the numbers are amazing. First a quick snapshot of were China is today. Economic growth has significantly slowed down in China. Last year China grew by 9% slowing from double digit growth in the past few years. 9% growth is still much more than many OCED countries. Growth in the Fourth Quarter of 2008 was 6.8% and many predict growth in the first two quarters of 2009 will be slow. Nevertheless the general view is that the Chinese people have faith in their government to get them through this tough time. This is in stark contrast from the media commentary that China is worried about civil unrest. Don’t get me wrong there are some real issues in China but not to the extent of imminent mass protest. However, the Beijing government is very much aware of the potential for unrest and they are doing whatever it takes to maintain social stability. Beijing Axis expects China to grow by 5.8% in 2009 and 7.5% in 2010. With these figures China will outperform the developed economies. One way China will potentially mitigate the effects of the global crisis will be by increasing private consumption in China. Private consumption in China is 30% compared to the USA, which is at 70%.

China is the largest consumer of most of the world’s resources and the second largest consumer of energy in the world. China gets its resources and energy from Africa. For example Angola is the largest supplier of crude oil to China. There are over 1000 companies doing business in Africa. Dr Martyn Davies, CEO of Frontier Advisory (Pty) Ltd. made a fantastic presentation on China after the Resource Boom. I would like to focus on some points he made on China and Africa. Dr Davies introduced an interesting concept called the New Coupling of African and Chinese growth and development. Data shows that over the last decade China and African growth has been similar. Chinese growth is dependant on Africa’s ability to supply. There is a very high level of Chinese to engage with Africa. There is continued growth of Chinese business activities in construction in high risk countries like Sudan. This potentially a change in the game plan on dealing with Africa. China could be introducing a new risk model for Africa.
China also looks at Africa as an emerging market and not just a place to give aid. China rightly acknowledges that Africa has potential to grow its domestic consumption and Chinese companies import a lot into Africa. China is Africa’s second largest trading partner country (different from the EU which is a block of countries). The Chinese government have set up the China Africa Development Fund which is a Venture Capital fund for Chinese companies doing business in Africa. These companies are encouraged to enter into Joint Ventures with African countries and work in Special Economic Zones in African countries. To date there are 40 projects in the pipeline with about US$400 million having been spent.

Dr Davies noted that the Chinese growth phenomenon is not over; it may only be half way done. As I have noted above many are arguing that the next level of Chinese growth will be dependent of internal consumption in China. Dr Davies does however go as far as to argue that the Chinese government engineered its own slow down last year so as to avoid overheating. Therefore if this reasoning holds China can switch on the growth switch. In essence Dr Davies was very bullish on China, so much so that he believes the decoupling of the western economies and China is possible in 2009.

China is a big deal and it’s a big deal for Africa. I learnt a lot from those that spoke on China and I would like to see more debate in the media on China and Africa.

By Simbarashe Mabasha

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