What does China want from Africa?

Three times smaller than Africa in land size but more populous, China’s footprint on the continent has been growing rapidly.

China is one of the lead contractors in the Nigerian National Petroleum Corporation’s (NNPC), recently executed contracts for the engineering, procurement, construction, commissioning and financing of Lots 1&3 of the 40inch by 614km Ajaokuta-Kaduna-Kano gas pipeline and stations, under a 100 percent contractor financing model.

Under the terms of contract, Lot 1 with total length of 40inch x 200km stretching from Ajaokuta to Abuja Terminal Gas Station was awarded to the OilServe/Oando Consortium.

Lot 3 which will run from Kaduna Terminal Gas Station (TGS) to Kano TGS with total length of 40inch x 221km was awarded to the Brentex/China Petroleum Pipeline Bureau (CPP) Consortium.

It is envisaged that contract agreement for Lot 3 which covers 40inch x 193km stretching from Abuja to Kaduna will be executed in the weeks ahead.

Maikanti Baru, Group Managing Director of the NNPC said the AKK Gas pipeline was a section of Trans-Nigerian Gas Pipeline under the gas infrastructure blueprint designed to enable the industrialization of the Eastern and Northern parts of Nigeria. The project would also enable connectivity between the East, West and North, which is currently non-existent.

Chinese capital investment into Africa up to July 2016 has increased by 515 percent from full-year 2015 figures. With more than $14bn invested in Africa by Chinese companies in 2016, investment levels have already surpassed every year of recorded data available for fDi Markets since 2003. The previous record for investment into Africa from China was in 2008, with just over $9bn invested in this year.

In addition, the number of investment projects into Africa from China is set to surpass any previous year since 2003, with 36 projects recorded from January to July 2016. With 38 projects for the whole of 2012, the number of projects recorded during 2016 is certain to reach a new high.

Here is what China wants

China’s push into African economies puts it in direct competition for influence with the United States, and as of 2015, China has the upper hand. Chinese-African trade, projected to double by 2020, already totals over $200 billion, more than twice the level of U.S.-African trade.

In 2014, the U.S. committed to investing $14 billion in African aid over the next decade, but that is only a fraction of China’s commitment to invest an additional $175 billion over the same time period. Nearly half of China’s total foreign aid goes to African nations.

The stakes in Africa are high due to the continent’s rich abundance in raw materials. Africa is estimated to contain 90 percent of the entire world supply of platinum and cobalt, half of the world’s gold supply, two-thirds of world manganese and 35 percent of the world’s uranium. It also accounts for nearly 75 percent of the world’s coltan, an important mineral used in electronic devices, including cell phones, according Investopedia, an online investment intelligence platform.

China is the premier emerging market nation, and the well-being of its economy significantly impacts world markets. As the world’s largest nation continues its economic expansion, Chinese leaders recognise the increasing need for natural resources, food and product markets necessary for continued economic growth.

The African continent is a logical place for China to look to extend its geopolitical influence. China is already the preeminent power in Asia. India, a historically traditional rival of China, is not a realistic choice for China to look for an increase in political influence, but the largely undeveloped countries of Africa represent a prime opportunity for China to significantly expand its global presence and influence in the world.

China is known for its pragmatism, economic and otherwise. While it represents a major emerging market opportunity for developed countries, China itself has to consider where its primary emerging market opportunities exist. It is already heavily invested in other Asian emerging markets, as well as in Latin markets and South America. African economies provide another sensible choice to take advantage of excellent growth opportunities.