Miruna Codeanu

China and Africa, win-win

In espresso on May 6, 2014 at 7:01 am

Despite all skeptics, China will soon be recognized as world’s new leading economy. In some aspects first, in others second, we could all agree, China is rising and making its way to the top. China has been learning how to act like a world leading economy. Take the new Sudanese crisis. Sudan is the source for an important percentage of China’s natural resources supplies. The African matters, very difficult matters I might add considering UN’s numerous failures, are a good training camp for China’s new role regarding the world order.

China’s economy is very much based on manufacturing. However, for the last 4 months China manufacturing has been constantly falling. There are some, somewhat crazy, somewhat interesting correlations being made between skyscrapers and financial crisis.  Some of the world’s tallest buildings are being built right now. Also, China’s wealthiest man sold all his businesses in China. China reported its official PMI (Purchase Manager’s Index) to be 50.4 in comparison with 50.3 in March with a very slow growth. A HSBC  report shows slightly different numbers: from 48.3 in March to 48.1 in April, as the fourth successive month with health deterioration.

We’ve been all seeing it and saying it. Manufacturing in China might have been cheap some time ago, but nowadays, manufacturing in China is no longer so cheap. With every Starbucks opening around the corner, manufacturing in China became more expensive. Where will the world manufacture its goods from now? Robots? No, sorry guys, but robots are still a bit more expensive than human labor, and clearly, than human labor in a certain part of the world. Yes, that is right: Africa. BMW, openend a manufacturing plant in South Africa and many companies are opening plants in Morocco and Algeria. What’s new about this? Well, not much. It was foreseeable. The novelty is that what some years ago was a prediction is now happening: China announced to double African trade. China is set to strengthen  its friendship with the continent as it is one of the world’s fastest growing economies.

Africa could be what saves us from a new economic crisis. Take the recent Chinese example. Fast growing economy means fast growing market. China announced to increase its direct investment to $100 billion by 2020. (source: Industry Week). The trick is, the country set to establish a long term partnership with Africa is China, not the US, nor the EU. By investing in Africa, China will be saving itself. With the African continent delivering natural resources and food to China and Africa are in a win-win situation. Also, with UN proving itself a failure, Africa might find China a trustworthy partner for its conflicts. Ukraine proved West to be old, crippled and out of control. However, still a market.

 

 

 

 

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