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Africa continues to shine for investors from China

2014-11-18 19:34:04

Diversified investments in the sub-Saharan region show nation's commitment tomaintain strong economic ties with fast-growing region, reports Du Juan.

Africa continues to be the beacon for China's outbound investment, with companiescommitting to cumulative investments of about $150.4 billion in the Sub-Saharan region from2006 to July 2014, despite the marginal slowdown in actual investment to the region,according to a new report.

Africa continues to shine for investors from China

The China GlobalInvestment Tracker,published by theWashington-basedAmerican EnterpriseInstitute and theHeritage Foundation,says the investmentpipeline continues to berobust in Africa, withactual investments inthe region rising to$19.49 billion by the endof 2013, compared with$5.54 billion in 2006when China started its"going global" strategy.

The report also findscommon ground with arecent white paperpublished by thegovernment on China's economic and trade cooperation with Africa, which said that China'sinvestment in Africa grew at an annual rate of 20.5 percent between 2009 and 2012.

Most of China's outbound investments in Africa have centered on the metals and energysectors which accounted for more than 80 percent of China's outbound investment in theregion, according to a separate report published by the Chicago, United States-based MayerBrown, a global legal service provider.

Actual investments to Africa slowed slightly during the first six months as China is looking todiversify its investment sectors and geographies. According to AEI data, China's outboundinvestment to Africa amounted to just $1.9 billion during the first six months of this year.

"The drop-off can be explained partly by a moderation of China's appetite for resources aseconomic growth slows, and also due to an increase in risk-aversion among nationalresources and energy companies," said the report.

Ge Xiangyang, a partner with Mayer Brown, said that has not stopped a flurry of deals byChinese private companies in Africa.

"For private companies, the driving force undoubtedly is the better returns that Africa offers,"Ge said.

Unlike the SOEs, private companies with an eye on Africa are also more cautious about thepossible risks, said Wang Jiahua, executive vice-president of the China Mining Association.

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