China cancels security talks with the US

The Chinese government has cancelled their planned security talks  with US Secretary of Defence Jim Mattis. The meeting which was planned for October has not been rescheduled and the reason for the cancellation is still to be determined.

There has been tensions surrounding China-US relations in recent months with escalating tariffs on Chinese import to the US resulting in a trade war. Other causes of the tension are the US sanctions on Chinese military for purchasing Russian weapons and the territorial disputes in South China Sea.

 These ever-rising tension might escalate and spiral out of control with the countries continue with retaliatory measures. Both the US government and Chinese government have not yet comment on the cancellation. But it is believed that the tensions between the two superpowers is the main reason for this cancellation.

The Chinese government did reiterate that it will not be forced or blackmail in to yielding over pressure created by the trade war.



Africa, Russia relations allow for better access to Eurasia

African export-import bank (Afreximbank) executive vice president, George Elombi believes a stronger relationship between Africa and Russia will assist the African continent gain more access and opportunity to Eastern Europe and Central Asia (Eurasia).

The Africa-Russia Development of trade and economic cooperation as well the advancement and strengthening of BRICS countries are part of Afreximbank’s strategic plan for 2017-2021. Russia’s geography and economic position is key to the plan.

Russia’s strength in exporting and manufacturing can offer African countries experience and opportunity to expand and develop its markets.  The Organisation for Economic Co-operation and Development (OECD) and the Russian Export Centre are some of Afreximbank’s stakeholders.


Source: Sputnik


Three common misconceptions about China investments in Africa

Misconception 1: Infrastructure Financing is the Only Game in Town

China’s presence in Africa is often discussed synonymously with the Belt and Road Initiative (BRI) — President Xi’s expansive policy framework to connect China with other regions via ports, railways, and fibre-optic cables. Government financing of infrastructure undergirds the effort and Chinese construction firms are involved in dozens of billion- dollar projects in African markets, such as the $4 billion Addis Ababa-Djibouti Railway which began commercial operations earlier this year. Chinese financing helps close a massive infrastructure gap, estimated at $170 billion per year by the African Development Bank

While still dominating the infrastructure space, Beijing’s commercial engagement with the region has evolved significantly over the past fifteen years, deepening and broadening in scope. Foreign direct investment (FDI), especially in technology, and small and medium enterprise diffusion are critical parts of China’s 2.0 approach to the continent.

FDI, invested by companies from their balance sheets, is the best indicator of true market interest. In 2016, the United States had $57 billion of FDI stock in Africa, while China had $40 billion, according to the United Nations Conference on Trade and Development (UNCTAD).

In terms of FDI growth rates, however, China FDI increased 24% between 2010 and 2014, while US FDI grew by only 10%. Both Chinese and American large-cap firms have an extensive presence on the continent. Companies such as Huawei and Transsion are becoming as well-known as General Electric and Coca-Cola in some countries.

Manufacturers of telecom infrastructure and low-cost smartphones such as ZTE and Tecno are gaining increasing market share. Tecno is gaining against established players and now boasts 25% of the continent’s smartphone market. Additionally, Alibaba’s Jack Ma recently launched a $10 million initiative for African entrepreneurs.

McKinsey estimates that there are over 10,000 Chinese-owned companies operating in Africa, the bulk of which are small firms. Increasing China’s commitments of state lending to SMEs operating on the continent has been a feature of past FOCACs and will likely be a major talking point again this year.

Misconception 2: Beijing Orchestrates All BRI Investment Activity

While the BRI is a linchpin in Xi’s foreign policy, the notion that all BRI activity in Africa is carefully orchestrated and coordinated by top party officials in Beijing is false. The broad thrust of greater engagement with Africa has senior leadership support, but party officials are not micromanaging state-owned enterprises and coordinating their activities abroad.

There is significant competition amongst Chinese companies fighting for the same large-scale infrastructure contracts in the region.

Beijing does not keep a central information repository on foreign loans extended as part of BRI. There is no Chinese version of the “US Overseas Loans and Grants” publication, which offers Congress a comprehensive overview of aggregate US government foreign economic and military assistance.

While international focus has thus far centred on BRI recipients, attention may shift soon to China’s own public finances as borrowers struggle to repay debts. The lack of coordination undercuts the idea that China is a strategic juggernaut that cannot be derailed.

Misconception 3: African Governments are being Swindled by Beijing

A final myth is that African governments are passive in negotiating contracts with the Chinese and regularly coerced into accepting bad deals. Over the fifteen years of increased Chinese activity in the region, African governments are aware of Chinese interests and have refined their negotiating tactics to better advance development objectives.

Despite criticism that Chinese firms heavily depend on Chinese labour, for example, most infrastructure projects are completed primarily by African workers, with Chinese nationals in management or technical positions.

A comprehensive 2017 McKinsey report on Sino-African economic relations reported that Africans comprised 89% of labour on the projects surveyed. Local content and job training are regularly included as part of contract negotiations between African countries and China Export Import Bank. While some railway and road developments involve kickbacks for African politicians, most spur real economic growth.

As better infrastructure facilitates trade and the movement of people, however, concerns over African debt levels are emerging from both US and international sources. A March 2018 Centre on Global Development report highlighted Djibouti as one of eight countries in severe debt distress because of excessive Chinese borrowing, with public external debt as a percent of GDP increasing from 50% to 85% in two years. Beijing owns approximately half of Angola’s external debt and over 70% of Kenya’s bilateral debt, an increase of 10-fold since 2013.


© World economic forum


Brazil, India to grow agriculture and food business relations

Over the next year, Brazil’s companies are expected to attain nearly $80 million in food and agriculture business.

Brazil companies visited India as part of the Annapoorna World of Food India Fair 2018 that took place in India New Delhi and Mumbai from 23 September to 29. Nine of the 20 companies are bean producers. The companies are visiting the country as part of the Brazilian Trade and Investment Promotion Agency (Apex-Brasil) in partnership with Brazil’s Ministry of Foreign Affairs.

“It is very important to strengthen the trade between the two countries. The current trade flow doesn’t reflect the size and economic diversity of both countries. We see India as a good market for Brazilian products and we believe we can be competitive and bring a quality offer goods”, says Apex-Brasil’s intelligence coordinator, Igor Celeste.

“We have taken several initiatives towards the Indian market and Brazilian companies are getting more interested” said Celeste.  

“The fact that from nine companies participating last year in the mission the number has gone up to 20 is indicative of the interest Indian markets generates for these companies. And for the next year we have 25 countries which want to visit India for business”, he added.

Brazil was the third largest seller of beans to India with 6% of the market share in 2017. India last year imported 553 million beans and form that amount 34 million were from Brazil.


Source: Financial Express