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Forecasts for solid growth give China confidence in continent
Africa is likely to surpass the EU and the US to become China's largest trade partner in three to five years, a senior commerce official and government adviser said.
In the process of China's ongoing strategic repositioning in the global market, increasing effort is being made to build economic ties with the continent, said former vice-minister of commerce Wei Jianguo in an interview with China Daily.
In 2012, China's trade with Africa will probably hit $220 billion, up 25 percent year-on-year. According to Wei, China's exports to Africa grew 22 percent in the first nine months this year, while imports jumped by 21.5 percent during the period.
The Ministry of Commerce said that in 2011, China's trade with Africa hit $166.3 billion, a jump of 83 percent over 2009.
Currently, the EU is China's largest trade partner, with bilateral trade volume of $567.2 billion in 2011. The US is the second largest trade partner with China, with bilateral trade volume of $446.7 billion, according to the General Administration of Customs. But trade with Africa is expected to close the gap quickly.
"I expect China-Africa trade to see faster growth next year, as more Chinese companies have already been beefing up their business activities on the continent," said Wei, who is vice-chairman and secretary-general of the China Center for International Economic Exchanges, a high-level government think tank.
China's confidence in its future African ties, Wei added, is also based on the forecast that the EU's economy will remain sluggish in the coming three to five years and that US economic growth would linger at a low level.
The IMF said in its recent report that the EU will probably see a net decrease of 0.2 percent in its economy in 2012. Although growth is expected to be stronger in 2013, it will remain at a low level of 0.5 percent.
The IMF's forecast for the US economy was 2.2 percent for 2012 and 2.1 percent for 2013.
"Due to the recession of the global economy, it is almost impossible for China to achieve a foreign trade growth target of 10 percent for the year, and the situation for next year remains grim," Wei said.
He called for more government policies to support export-oriented enterprises, including expanding the scope of products that enjoy tax rebates, hiking the tax rebate rate and quickening the rebate process.
"The decline in exports and imports may pose the biggest challenge for China's economy in the coming months. September and October may be the worst time for China's exports as it is the key season for exporters to grab Christmas orders," said Wei, who is also a guest economist of China Daily.
The World Bank on Monday lowered its forecast for China's GDP growth to 7.7 percent this year due to lackluster exports and lower investment growth. It also lowered the country's growth forecast in 2013 to 8.1 percent, from 8.6 percent.
On the enterprises side, Wei said Chinese exporters should quicken their pace in diversifying their target markets, adding it is now the best time to invest in Africa.
Africa, which faces similar development opportunities to China's in the 1970s and 1980s, boasts a huge potential consumption market.
According to IMF estimates, GDP growth for the Middle East and North Africa may reach 5.3 percent in 2012 and 3.6 percent in 2013. The figure for sub-Saharan Africa is 5.0 percent this year but will be 5.7 percent next year.
China's investment in Africa, Wei estimated, will grow by 30 to 40 percent this year.
"But this is not enough, and we should further strengthen our investment, especially in the infrastructure, agriculture and manufacturing sectors," said Wei.
China's non-financial direct investment in Africa increased 58.9 percent year-on-year to $1.7 billion last year, according to the Ministry of Commerce. By the end of 2011, Chinese investment stock in Africa reached $14.7 billion, up 60 percent compared with 2009.
For Cheng Zhigang, secretary-general of the China-Africa Industrial Cooperation and Development Forum, Chinese investment in Africa centered on energy, minerals and infrastructure.
Alassane Ouattara, president of Cote d'Ivoire, said they hope more Chinese companies invest in private sectors to stimulate economic growth and create more jobs for local people, especially young people.
"Chinese investment is the cornerstone for our country to maintain a double-digit GDP growth from 2014 to 2015," Ouattara said when attending the Fourth Conference of Chinese and Africa Entrepreneurs in July.