China boosts African economies, offering a 'second opportunity'

Trade between China and Africa reached a record $55 billion last year, much of it coming from oil and metals.

A bicycle craze has hit South Sudan. And with it, decorative fake flower handlebar bouquets have become all the rage.

"If you have a bicycle, then you need flowers, because they are so beautiful," explains John Dut, a former rebel now working as a security guard for a Danish charity.

Mr. Dut's bouquet of choice: pink and orange. "Sudanese people like nice things," he says.

The brutal 21-year-long civil war, the millions dead or displaced, and the insufferable poverty usually associated with South Sudan are a far cry from the stuff of beauty.

But, today, with a fragile 2-1/2-year peace deal between rebel and government forces holding, roads being built, and commerce trickling in – locals are turning some attention away from survival and toward a few of life's simpler pleasures – like shopping.

Candy-apple-red nail polish is for sale in the market stalls under the acacia trees. Toothpaste and matchboxes are here, too. Soap. Mattresses. Padlocks. Suitcases. Shoes. And the hottest sellers of the moment: shiny Phoenix 10-speed bicycles and their attendant fake flower handlebar decorations.

All of it is made in China.

In most parts of the world, such everyday items wouldn't raise an eyebrow. But here, this feels like the dawn of a new age of consumption.

Five years ago, there was nothing to buy, says Moga Johl, a shopkeeper in the dusty, languid former rebel stronghold of Rumbek. "Absolutely nothing."

From the well-stocked markets of Rumbek to the Chinese oil firms in Sudan's upper Nile; the Chinese weapons in Darfur; and the Chinese laborers building the new presidential palace in Sudan's capital, Khartoum – China, in its many forms, has made a grand entry.

Sudan's experience is hardly unique. There is more trade going on today between China and Africa than ever before. In the late 1980s, trade between the country and the continent was $12 million. Last year, according to official Chinese figures, it reached a record $55 billion. In 1991, Chinese direct investment in Africa was less than $5 million a year. In 2006 – China's official "Year of Africa" – it reached $1.25 billion, according to the Chinese Academy of Social Sciences. Sudan is the No. 1 recipient of that investment.

"The Chinese have big machines and factories and they work day and night ... and at the end of the day this means we can go shopping," says Jacob Marial, a rebel-leader-turned-bicycle repairman in Rumbek. "My wife likes green tea toothpaste."

THE backbone of China's blossoming relationship with the continent is raw materials. China, with its rapid economic and industrial growth, needs them – and Africa has them in abundance. Some 30 percent of China's oil imports now come from Africa.

Last year, Angola overtook Saudi Arabia as the largest oil supplier to China, and Sudan – China's second-largest supplier on the continent – sold close to 65 percent of its oil to Beijing. China is also either drilling or exploring for oil in more than half a dozen other African countries.

Beyond oil, China is extracting copper from Zambia and cobalt (a key ingredient in making cellphones and laptop computers) from Congo, buying timber in such countries as Cameroon and Liberia, and getting manganese for manufacturing steel from Ghana. South Africa is one of China's biggest suppliers of iron ore.

With $55 billion in trade with Africa last year, China has quickly inched past France ($47 billion) to become the continent's second-largest bilateral trading partner, after the US ($91 billion), according to the International Monetary Fund. Martyn Davies, head of the Center for China Studies at South Africa's Stellenbosch University, estimates that within five years, China will be the continent's No. 1 trading partner.

Last November, when leaders from 48 African countries attended the Beijing summit of the Forum on China-African Cooperation, Beijing announced it would double both its investment and aid to the continent. Soon after, during his 12-day, eight-nation African tour in February (his third such visit in as many years) President Hu Jintao began making good on this promise – dispensing billions of dollars worth of debt relief and announcing discounted loans and new investments.

In Sudan alone Mr. Hu cheerily waved away $80 million dollars in debt. He made the announcement while visiting the controversial new hydroelectric plant in Meroe – financed by the Chinese to the cost of $1.8 billion.

Hundreds of Chinese companies – many state-owned – are marching in the footsteps of their leaders, snatching up incentives and operating in 49 African countries (of which 25 are totally exempt from export tariffs).

The Chinese public is not far behind, with 24 African countries are now approved by Beijing as destinations for Chinese holidaymakers.

And Africans know which way the wind is blowing: Universities from Namibia to Uganda are opening Chinese language departments. The continent's three Confucius Institutes – promoting Chinese language and culture – in South Africa, Kenya, and Rwanda are so popular that a dozen more are scheduled to be opened next year. Schoolchildren from Khartoum to Cape Town are learning to say ni hao (which means "hello" in Mandarin).

Meanwhile, as commodity prices on the continent rise, so does the much needed cash flow into segments of the economy – and so do African incomes.

Sub-Saharan Africa's gross domestic product growth rate was negative in the 1970s and '80s – but, since the '90s has consistently been above 5 percent. The Sudanese growth rate is particularly impressive; a whopping 13 percent this year, say government forecasts.

Still, say some observers, the availability of cheaper Chinese products can be a mixed blessing.

In Lesotho, South Africa, and Ghana the arrival of Chinese cloth in traditional African patterns has forced some textile plants to close. In Zambia, the main opposition party has accused China of dumping inexpensive goods and bankrupting Zambian traders.

But by and large, argues Harry Broadman, a World Bank economic adviser on Africa, who recently completed a study on Chinese and Indian firms in Africa, "The Chinese are filling a market need that would simply not be filled otherwise."

Chinese manufacturers, he notes, are creating needed economies of scale, pushing African firms to be more competitive, and increasingly partnering with them. Lately, they've starting processing more goods on the continent.

"If the Africans can be proactive, through domestic reforms and flexible labor markets, they can empower themselves, use their collective leverage, and use the investments coming in for their benefit," says Mr. Broadman. "This is a second opportunity for Africa."