1. Page 1
www.thebeijingaxis.com
Opportunity, Risk and Risk Management
in Africa
(PICC and Hollard Insurance)
Beijing, 05 December 2012
The Sino-Africa Relationship and Its
Future Evolution
Haiwei Huang
AssociateDirector
The BeijingAxis
China-focused
InternationalAdvisoryand Procurement
The Beijing Axis 1
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document, no responsibility or liability is accepted for errors or omissions of fact or for any opinions expressed
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Past performance is not necessarily indicative of future performance; the value, price or income from
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judgement with respect to any matter contained in this document.
The Beijing Axis 2
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The Beijing Axis 3
Africa Axis - Africa-focused International Advisory and Procurement
• Founded in 2010; has successfully worked with many international and African MNCs
• Operates in four synergistic cross-border African businesses
• Provides services across various sectors, with a core focus on the MINING, RESOURCES, INDUSTRIAL, ENGINEERINGand
OTHER SERVICES sectors
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The Beijing Axis 4
Key global factors
Source:The Beijing Axis Analysis
The backdrop
• China‘s rise … labour market and supply shock as a producer … engine as a consumer … investor
• New competitivelines and forces, winners/losers – the rise of Asia, BRICS, etc.
• A two-speed global economy over the medium and long term
• A lasting GDP trajectory in Asia, Africa and Latin America – governance, growth, stability, infrastructure, confidence,
etc.
The issues now
• Europe broken … fragile developed markets – and knock-on effects?
• China‘s landing – soft or hard? Implications for growth and resource demand?
• Tapping into the China story vs. over-reliance on China and need to diversify economic ties
• Strategic intelligence – to make decisions in boardrooms around the world in order to reposition
The Beijing Axis 5
Africa‘s economic fundamentals and current global position reflect its
potential for long term economic growth and development
Source: IMF; UNCTAD; The Beijing Axis Analysis
0%
20%
40%
60%
80%
100%
World GDP 2010World GDP 2010 Developing
Countries GDP
2010
Africa GDP
2010
Africa GDP
2010
Africa GDP
2010
Africa GDP
2010
Africa GDP 2010
USD 63 tn USD 63 tn USD 22 tn USD 1.6 tn
Europe
North
America
Asia
Africa
Mid-East
Africa
Developing
Countries
(excl. Africa)
Developed
Countries
Africa
Developing
Countries
(excl. Africa) Africa
South
Africa
Egypt
Nigeria
Algeria
Angola
Kenya
Others
Ghana
Tanzania
Northern
Africa
Southern
Africa
Western
Africa
Central
Africa
Eastern
Africa
Primary
Industry
Secondary
Industry
Tertiary
Industry
Private
Consumption/
Expenditure
Gross Capital
Formation
Government
Consumption/Expenditure
Net Exports
USD 1.6 tn USD 1.6 tn USD 1.6 tnUSD 1.6 tn
Breakdown of Africa’s Share in the Global Economy (USD tn, 2010)
Lat Am

2. Page 2
The Beijing Axis 6
Top 30 Countries Ranked by Average GDP Growth (%,
2007-2011)
Source:IMF; The Beijing Axis Analysis
Africa is home to some of the fastest growing economies in the world
16.6
11.8
11.2
10.5
10.5
10.0
9.7
9.2
9.1
8.9
8.8
8.7
8.3
8.1
8.0
7.9
7.8
7.4
7.4
7.3
7.1
7.0
6.9
6.9
6.8
6.8
6.7
6.6
6.5
6.5
0 5 10 15 20
Qatar
Timor-Leste
Turkmenistan
China
Afghanistan
Azerbaijan
Ethiopia
Bhutan
Angola
Panama
Equatorial Guinea
Uzbekistan
Mongolia
India
Ghana
Laos
Malawi
Rwanda
Uganda
Papua New Guinea
Peru
Nigeria
Argentina
Mozambique
Tanzania
Lebanon
Tajikistan
Vietnam
Sri Lanka
Zambia
African Countries
Other Countries
Of the 30 fastest
growing economies
over the past five
years, 11 are in Africa
18.8
17.3
14.7
13.6
10.6
10.6
9.9
9.3
9.3
9.2
8.9
8.9
8.8
8.7
8.5
8.3
8.3
8.2
8.2
7.8
7.6
7.5
7.5
7.4
7.4
7.2
7.2
7.1
7.1
7.0
0 5 10 15 20
Qatar
Mongolia
Turkmenistan
Ghana
Timor-Leste
Panama
Iraq
Solomon Islands
Zimbabwe
China
Papua New Guinea
Argentina
Rwanda
Eritrea
Turkey
Uzbekistan
Laos
Sri Lanka
Kuwait
Ecuador
Estonia
Ethiopia
Kazakhstan
Tajikistan
Maldives
India
Nigeria
Equatorial Guinea
Mozambique
Georgia
African Countries
Other Countries
Top 30 Countries Ranked by GDP Growth (%, 2011)
2011 saw a similar
picture, with some
countries (Ghana and
Rwanda) accelerating
their growth, and others
(Zimbabwe and Eritrea)
joining the top 30
The Beijing Axis 7
Agenda
1. Political and Economic Aspects of the Sino-Africa Relationship
2. China‘s Outbound Investments into Africa‘s Resource Sector
3. The Future Trajectory of Sino-Africa Relations
4. Final Word
The Beijing Axis 8
China-Africa relations have steadily progressed through three distinct
phases. The current phase is mainly driven by China's increasing need for
resources and Africa's need to modernise
Phases of Sino-African Relations
Source: Variuos;The Beijing Axis Analysis
Political Phase
(1950s – mid-1970s)
Dormant Phase
(mid 1970s – late 1990s)
Commercial Phase
(2000s – present)
• Non-Aligned Movement
• African post-colonialism
• PRC vs. Taiwan recognition
• Recognition by China of newly
independent African states
• Foreign aid by China in return for PRC
(vs. Taiwan) recognition
• Mutually-beneficial UN voting support
Phase
Drivers
Examples
• China occupied with post-1978 ―Open-
Door Policy‖ and economic reforms
• Heavy competition for African influence
from US and USSR
• Slowly rising Chinese exports of light
industry production (garments, textiles,
toys)
• Small, trade driven deals mainly with
private Chinese firms
• China‘s demand for raw materials and
other resources
• China‘s quest for new markets for its
goods and services
• China‘s quest for international influence
via OFDI, aid, mediation / UN votes
• FOCAC, CAD Fund
• Government-to-government resource
deals
• Resources for infrastructure
• Long term financing with no strings
attached
• Chinese EPCs in Africa‘s infrastructure
build-up
The Beijing Axis 9
China-Africa relations have accelerated in the last decade, with Chinese
high-level diplomatic visits to Africa often preceding heightened trade,
investment, loans and aid
Key Phases of China-Africa Relations
Source:Various;The Beijing Axis Analysis
1999:China initiates
its ‗going out‘ policy
1999:Chinese presidentsends
letter to African presidentsand
Organization forAfrican Unity to
establish ministerial conference
2000:First Forum on China-
Africa Cooperation(FOCAC)
held in Beijing
2002:Ethiopia hosts China-
Africa meeting of senior officials
2003:FOCAC
meeting held
2004:China-SouthAfrica Bi-
National Commission (BNC) held
to strengthenties
2005:China and the United Nations Development
Programmelaunch the China-AfricaBusiness
Council
2001:China admitted to World
TradeOrganization
1999 2000 2001 2002 2003 2004 2005
2006 2007 2008 2010 2011
2006:First China-
Africa Business
Council held
2007:China-AfricaDevelopment
Fund (CAD Fund)established to
assist Chinese investment in Africa
2007:Chinese bank ICBC
takes 20% equity stake in
Africa‘s largestbank,Standard
Bank
2008:CAD fund
makes its first deal
2008:Banneryear for Chinese
investment in Africa,with total
trade topping USD 100 billion
2009:CAD Fund opens
first officein Africa, in
South Africa
2009:Chinese
President Hu Jintao
makes 6th diplomatic
visit to Africa
2010:China extendszero-tariffpolicy
to 454 goods for 30 African countries
deemed ‗least developed‘
2009:Fourth FOCAC Ministerial
Conferenceheld in Egypt
2011:Chinese Foreign Minister,Yang Jiechi,
visits five African countries
2011:Press reportsthat China‘s policy banks—China
Development Bank and China Exim Bank—loanedmore to
the developing world than the World Bank since 2008
2009
5th FOCAC
in 2012
The Beijing Axis 10
Africa’s Top 20 Trade Partners (USD bn, 2010)
Source: UN Comtrade;The Beijing Axis Analysis
A number of Africa's most important trade partners are from Asia, with China
being the largest one
67
87
31
41
31
22
29
16
15
12
6
11
9
6
8
10
5
2
1
3
60
28
35
23
18
27
14
15
15
12
16
9
10
9
6
3
5
7
7
5
0 20 40 60 80 100 120 140
China
US
France
Italy
India
Germany
Spain
UK
Netherlands
Japan
S. Korea
Brazil
Belgium
Turkey
UAE
Canada
Portugal
Thailand
Singapore
Malaysia
Import from Africa
Export to Africa
In 2011, the total trade value
between China and Africa
reached USD 166 bn, with
imports and exports accounted
for 56% and 44% respectively
In 2011, the total trade
value between the US and
Africa was USD 127 bn,
with imports and exports
accounting for 75% and
25%, respectively
Asian Countries
India is second-
largest among
Asian countries
The Beijing Axis 11
5.6
67.1
5.0
59.8
0
10
20
30
40
50
60
70
80
2000 2010 2000 2010
China Trade with Africa (USD bn, 2000, 2010)
Source: UN Comtrade;The Beijing Axis Analysis
India Trade with Africa (USD bn, 2000, 2010)
While both Chinese and Indian trade with African countries has risen
dramatically in the last decade, China significantly outperforms India in terms
of Africa trade volumes
3.5
31.4
2.2
17.9
0
5
10
15
20
25
30
35
2000 2010 2000 2010
Imports Exports Imports Exports
In 2011, the
imports value was
USD 93.2 bn
In 2011, the
exports value was
USD 72.9 bn

3. Page 3
The Beijing Axis 12
0 5,000 10,000 15,000 20,000 25,000
Resources
Electrical Equipment & Machinery
Textiles and Footwear
Metal & Products
Others
15,000 10,000 5,000 0
South Africa
Angola
Sudan
Nigeria
Egypt
Morocco
Algeria
Libya
Congo
Benin
China’s Trade with Its Top 10 African Trading Partners (USD mn, 2011)
Note: The top ten countries comprise more than 76% of China‘s total tradewith Africa
Source:UN Comtrade;The Beijing Axis Analysis
China‘s trade relationship with Africa is characterised by importing raw
materials from Africa in return for Chinese manufactured goods
Chinese Imports
2011 USD mn
Chinese Exports
2011 USD mn
The Beijing Axis 13
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
CobaltOre
('000tons)
Aluminium
(mntons)
Nickel
('000tons)
IronOre
(mntons)
Platinum
('000oz)
ChromeOre
('000tons)
CopperOre
('000tons)
ZincOre
('000tons)
Manganese
Ore…
Demand Production
China’s Implied Demand and Domestic Production
of Commodities (2010)
0
50,000
100,000
150,000
200,000
250,000
300,000
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
Exports Imports
Source:USGS; BP; WGC; USDA; Various;The Beijing Axis Analysis
China’s Mineral Product Imports and Exports (USD
mn, 1992-2010)
China‘s demand outstrips domestic supply across a number of
commodities. As a result, imports are needed to compensate for the deficit
The Beijing Axis 14
Raw material producers around the world are benefiting from this trend -
Africa is a key supplier of these raw materials to China
Note: The number inside the dotrepresentsthe importer‘s worldrank
Source:UN Comtradedatabase;The Beijing Axis Analysis
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
3
2
1
4
5
1
2
3
4
5
China
1
2
3
4
5
1
2
3
4
5
Copper Ore
Zink Ore
Nickel Ore
Bauxite
Lead Ore
Chrome Ore
Platinum
Manganese
Crude Oil
Iron Ore
Coal
12
3
4
5
1
2
3
4
5
1
2
3
4
4
The Beijing Axis 15
Africa is a key supplier of cobalt, manganese, chromium, platinum and
crude oil to China
China’s Imports of Selected Commodities from Africa (USD bn, 2001-2011)
Note: Bubble size is basedon the commodity‘s shareof China total commodity imports from Africa in 2011
Source:UN Statistical Database;The Beijing Axis Analysis
CAGR 2001-2011
-20%
0%
20%
40%
60%
80%
100%
0% 20% 40% 60% 80% 100%
China’s imports from Africa as a % of total world imports in 2011
Cobalt Ore
Ferroalloys
Nickel Ore
Petroleum Gases
ElectronicsStainless Steel
PlatinumCrude Oil
Copper Ore
Chromium OreManganese Ore
Diamonds
Iron Ore
Wood
Tobacco
Cotton
- High growth rate
- High volume
- Highest growth
- High volume
- Most strategic
- 95% of China‘s imports
come from Africa
The Beijing Axis 16
A more in-depth view of China‘s import structure from Africa is attainable
after excluding oil
China’s Imports of Selected Commodities from Africa, excl. Crude Oil (USD bn, 2001-2011)
Note: Bubble size is basedon the commodity‘s shareof China total commodity imports from Africa in 2011
Source:UN Statistical Database;The Beijing Axis Analysis
CAGR 2001-2011
-20%
0%
20%
40%
60%
80%
100%
0% 20% 40% 60% 80% 100%
China’s imports from Africa as a % of total world imports in 2011
Cobalt Ore
Ferroalloys
Nickel Ore
Petroleum Gases
ElectronicsStainless Steel
Platinum
Copper Ore
Chromium OreManganese Ore
Diamonds
Iron Ore
Wood
Tobacco
Cotton
- Most strategic
- 95% of China‘s imports
come from Africa
- High growth rate
- High volume
- Highest growth
- High volume
The Beijing Axis 17
The upshot
• China‘s engagement withAfrica is partiallyresponsiblefor Africa‘sdynamic growth over the past
decade
• Sino-Africarelationshave strengthened in the last decade,with high-levelChinese diplomatic visits
to Africa often precedingheightenedtrade, investment,loans and aid
• While China‘s role in Africa trade outperformsthose of otherAsian nations,it still mostly focuseson
the resourcesector
• Continuous and robust domesticconsumption will drive growth moving forward – China will retain
its influencein resource demand even as its growth rate slows

4. Page 4
The Beijing Axis 18
Agenda
1. Political and Economic Aspects of the Sino-Africa Relationship
2. China’s Outbound Investments into Africa’s Resource Sector
3. The Future Trajectory of Sino-Africa Relations
4. Final Word
The Beijing Axis 19
0 50 100 150 200 250 300 350
US
Japan
UK
France
Hong Kong
Belgium
Switzerlnd
Russia
China
Virgin Is.
Germany
Canada
Italy
Spain
Netherlands
Austria
Sweden
Singapore
Denmark
S. Korea
World’s Top 20 Outward FDI Originators, Flows
(USD bn, 2011)
29.9 33.2 44.8 57.2
90.6
117.8
184.0
245.8
317.2
383.4
560.0
0
100
200
300
400
500
600
02 03 04 05 06 07 08 09 10 11 15F
Flows Stock
*Note: China OFDI flowsfor 2011do not include financial investments from September-December2011
Source:WIR 2011;The Beijing Axis Analysis
China OFDI Stock and Flows (USD bn, 2002-2015F)
China was the world‘s ninth-largest investor in 2011, ahead of other Asian
countries, except for Japan. China‘s OFDI stock is expected to reach USD
560 billion by 2015
China ranked 6th in 2009
China ranked 13th in 2008
and 2007
China ranked 5th in 2010
China ranked 18th in 2006
In 2011 alone, China invested in
1,392 overseas projects in 132
countries
In 2011, China‘s ranking
slipped to 9th overall, as the
Euro debt crisis discouraged
investment in the region
The Beijing Axis 20
0
20
40
60
80
2004 2005 2006 2007 2008 2009 2010 2011E
Others
Leasing & Commercial Service*
Banking and Insurance
Wholesale & Retail Trade
Transport, Storage and Postal Service
Manufacturing
Mining
Breakdown of Overseas Investments by Sector (USD
bn, 2004-2011E)
31%
28%
17%
10%
5%
9%
Iron Ore
Copper
Aluminium
Platinum
Exploration
Others
*Note: Commercial services include investments in holding companies,regional headquartersor SPVs that are often establishedin offshorecentresto invest in other countries and sectors
Source:MOFCOM;The Beijing Axis Analysis
Value of China’s Mining and Metals Investments by
Commodity (2011E)
China’s investments in chrome, nickel, and manganese are still very
small compared to other commodities
Resources occupy a key position in China‘s OFDI story – Taking into
account the SPVs, the mining industry ranks high in overall investments
The Beijing Axis 21
OFDI Stock in Africa by Source (USD bn, 2009)
Source:UNCTAD; The Beijing Axis Analysis
China already has a major role in Africa. It has invested much more in Africa
compared to Japan, although China still trails behind some of the traditional
colonial powers
0 10 20 30 40 50 60 70
UK
France
US
Netherlands
Switzerland
China
Italy
Spain
Japan
Canada
Denmark
Turkey
Ireland
Other OECD
Official Japanese OFDI
stock in Africa: USD 5.7 bn
Official Chinese OFDI
stock in Africa: USD 9.3 bn
Asian Countries
Other Countries
The Beijing Axis 22
Major Chinese Loans, Grants, and Development Aid in Africa (2002-2010)
Source:Overseas DevelopmentInstitute; CongressionalResearch Service; The Beijing Axis Analysis
Apart from equity investments, China funds a significant number of key
projects in Africa via grants, loans and export credit lines
Country Project Type Value (USD mn) Financing Aid Type
Angola
Extensive infrastructure in
energy and railways
7,400
Interest-free loans and
repayment in oil
Housing and related
infrastructure
3,500
Government-sponsored
investment
Safe drinking water 230 ConcessionalLoan, EXIM
DRC
Telecommunications 9.66 ConcessionalLoan, EXIM
Extensive infrastructure
from mining, roads,
railways, housing, medical
centres and universities
6,000
ConcessionalLoan,
repayment in future copper
and cobalt extraction
Mining infrastructure and
logistics
3,000
Government-sponsored
investment
Fiber optic 33.6 Preferential loan, EXIM
Mozambique Dam & plant infrastructure 2,300 Concessional loans
Uganda Government offices 20 Grants, donations
Tanzania ICT infrastructure 160 Concessionalloan, EXIM
Ethiopia
Infrastructure, hydropower,
public buildings
2,000 Loans, grants
Equatorial
Guinea
Not specified 2,000
Concessionalloans, credit
lines
Country Project Type Value (USD mn) Financing Aid Type
Nigeria
Offshore oil development,
railways, medical training
1,600
Debt cancellation,
investments and grants
Power plants and road
reconstruction
3,400
Government-sponsored
investment
Communications &
education program
100 Loan, EXIM
Kenya
Road construction 120 Concessionalloan, EXIM
Electricity 20.17 Concessionalloan, EXIM
Telecommunications 29.94 Concessionalloan, EXIM
Zambia
Dam infrastructure and
power station expansion
1,000 Concessionalloan, EXIM
Sports stadium 65 Grants, donations
Commerce 1,000 Concessionalloan, EXIM
Ghana
Infrastructure, education
and health programs
13,000
Concessionalloan, EXIM
and CDB
Gabon
Port, railway,
infrastructure, mining
3,000 Investments, grants
Sudan Oil production 4,200 Investments, loans, grants
During 2002-2007, China‘s economic assistance to
Africa amounted to USD 33bn. Of this, USD 17.8bn
went to infrastructure projects and USD 9.4bn to the
natural resource sector
The Beijing Axis 23Source: MOFCOM;The Beijing Axis Analysis
China‘s outward FDI into Africa is concentrated in a few countries. In 2010,
South Africa, DRC, Niger, Algeria, and Nigeria collectively accounted for
nearly 60% of Chinese OFDI in the continent
China’s OFDI Flows to Africa (USD mn, 2010)
0 50 100 150 200 250 300 350 400 450
South Africa
DRC
Niger
Algeria
Nigeria
Kenya
Angola
Zambia
Ethiopia
Ghana
Egypt
Botswana
Congo
Madagascar
Sudan
Liberia
Uganda
CAR
Tanzania
Gabon
Others
Account for 60% of
total OFDI

5. Page 5
The Beijing Axis 24
Africa’s Share of China’s OFDI Flows (USD mn,
2003-2010)
Source:Chinese Statistical Bulletin of OFDI; Xinhua; The Beijing Axis Analysis
Top 10 Sectors of China’s OFDI Stock in Africa (%,
2010)
China‘s total OFDI flow to Africa has risen dramatically since 2003, with
investments well diversified across a number of sectors
75
317 392 520
1,574
5,491
1,439
2,112
0
1,000
2,000
3,000
4,000
5,000
6,000
2003 2004 2005 2006 2007 2008 2009 2010
29%
22%16%
14%
6%
4%
3%
3% 3%
Mining
Manufacturing
Construction
Finance
Business Services
Wholesale & Retailing
Science, Technology and
Geological Exploration
Agriculture, Forestry, Animal
Husbandry and Fisheries
Others
2.6% 5.8% 3.2% 2.5% 5.9% 9.8% 2.6% 3%
The Beijing Axis 25
Note: Includes oil and gas
Note: The dots do notrepresenta particular investment, only focus countriesfor mining-relatedinvestments
Source:Various;The Beijing Axis Analysis
China is Asia‘s leading investor in Africa‘s mining sector. Recently, India
has been increasing its presence in the region
Focus Countries for Mining-related Investments in
Africa (2011)
Selected Major Chinese and Indian Players in Africa
China
USD 2 bn
(2010Investments inAfrica)
India
USD 1.5 bn
(2010Investments inAfrica)
China National Petroleum Corporation (CNPC) –Algeria,
Chad, EquatorialGuinea,Libya,Mauritania, Niger, Nigeria,
Sudan, andTunisia (oil andgas)
Sinosteel Corporation –South Africa, Zimbabweand
Cameroon(iron ore and steel)
JinchunanGroup (JNMC) – Zambia, Tanzania (nickel), South
Africa (platinum)
China NonferrousMetal Mining Corporation –Zambia
(copper)
Nava BharatVenturesLimited – Zambia (coal)
National MineralDevelopment Corporation – Senegal(iron
ore)
Essar Steel– Zimbabwe(iron ore andsteel)
VedantaResources –Namibia, SouthAfrica(zinc)
China Minmetals –South Africa(chromite, ferrochrome),
DRC (copper)
The Beijing Axis 26
Company Africa Role Africa Presence
China
Communications
Construction
CCCC‘s specialty is in transportation projects, yet in
Africa it also participates in more engineering-oriented
tasks, particularly those related to mineral extraction.
It is active in more African countries
(24) than any other Chinese firm
China State
Construction
Although a majority of its internationally earned
revenue originates in Asia, its 28.5 billion oil
refinery/petrochemical plant project in Nigeria awarded
in 2010 shows its tremendous potential in Africa.
Active in Algeria, Benin, Botswana,
DR Congo,Egypt, Ethiopia, Guinea,
Libya, Nigeria, Republic of Congo,
and Tanzania.
China Railway
Construction
Although its involved in a wide range of construction
projects on the continent (housing,railway, electrical
lines), its focus countries remain primarily in North
Africa.
Active in Algeria, Angola, Benin,
Ethiopia, Libya, Niger, Nigeria, and
Sudan
Metallurgical
Corporation of China
MCC ranks highly in international contracting, although
most of its attention has focused on Asia and Australia.
Recently, the companyhas been diverting more of its
attention toward Africa, particularly within the realm of
mineral extraction and beneficiation.
Active in Algeria, Angola, Egypt,
Ethiopia, Libya, Nigeria, and
Zimbabwe
Sinohydro
Although known for hydropowerand irrigation projects,
Sinohydro has also constructed many road projects in
Africa.
Active in Algeria Angola, Botswana,
DR Congo,Ethiopia, Gabon,Ghana,
Kenya, Libya, Mali, Mozambique,
Niger, Republic of Congo,Sudan,
Tanzania,Uganda,and Zambia
China National
Machinery Industry
It is one of the top international contractors for power
projects. Although most of its international revenues
are generated in Asia, the companyis very active in
many Africa countries, spanning various projecttypes
(housing,water plants, power plants, sugarplants).
Active in Angola, Botswana,
Cameroon,DR Congo,Gabon,
Ghana,Guinea, Ivory Coast, Kenya,
Liberia, Libya, Nigeria, Republic of
Congo,Senegal, Sierra Leone,
Sudan,Zambia, and Zimbabwe
Mapping of Chinese Contractors with Large
Presence in Africa
Note: CITIC Constructionis not featuredherebecauseits scope is limited to only two countriesin Africa, Algeria and Angola,and seemingly throughonly two projects.
Source:ENR; The Beijing Axis Analysis
Highlights of Chinese Contractors with Large
Presence in Africa
As China often secures access to mineral resources and oil in exchange for
infrastructure development, Chinese EPC companies have become
dominant in Africa
China Communications
Construction
China State
Construction
China Railway
Construction
MetallurgicalCorporation
of China
Sinohydro
China NationalMachinery
Industry
Some of China's EPC span
their scopeacross the
entire continent and
various sectors
The Beijing Axis 27Source:Various;The Beijing Axis Analysis
Apart from resources, China is setting up free economic zones across Africa
in order to supply various products to both local and international markets
China-sponsored Free Economic Zones in Africa Highlights
• Ogun Free Trade Zone (Nigeria)
Focus: construction materials, furniture and wood processing,
ceramics, ironware and electronic machinery
• Lekki Free Trade Zone (Nigeria)
Focus: light manufacturing, transport, telecommunicationand home
appliances
• Dukem Industrial Park (Ethiopia)
Focus: light manufacturing
• Chambishi Economic and Trade Cooperation Zone (Zambia)
Focus: mining industry (processing)
• Lusaka Economic and Trade Cooperation Zone (Zambia)
Focus: electronic component assembly and manufacturing
• Jinfei Economic and Trade Cooperation Zone (Mauritius)
Focus: light manufacturing
• More zones are planned in in the main financial and business hubs of
Sub-Saharan Africa, such as Johannesburg, Nairobi and Accra
Ogun Free Trade Zone
(2014-2015)
Nigeria
Ethiopia
Zambia
Mauritius
Lekki Free Trade Zone
(2014-2015)
Dukem Industrial Park
(2013)
Chambishi Economic and Trade
CooperationZone (2014)
LusakaEconomic and Trade
CooperationZone (2012)
Jinfei Economic and Trade
CooperationZone (2012)
• China‘s outboundcapital will continueto hit the headlines - Africa has not yet seen the full impact of
this
• Overseas investment is moving beyondtrade facilitation and natural resources, driven by an
increasing need to reach high-growth marketsand to pursueadvanced technologies.Link and align
these trends to the existing strategy
• Chinese investorsproceedingmore cautiouslyand are becoming more selectiveabout asset quality.
Valuation, cost escalation,operationsin unfamiliarjurisdictions, and operationalrisks are the major
concerns
• During the past decade,Chinese contractorshave captured an increasingshare of Africa‘s contracted
revenue, from as low as 7% in 2001 to as high as 38.7% in 2010, playing the dominant role on the
continent
• China‘s investmentsinto Africado not only carry a resourceagenda. China is setting up free
economiczones in Africa that span acrossvariousindustries,includinglight manufacturing,
constructionmaterials, transportand electrical machinery
The upshot
The Beijing Axis 29
Agenda
1. Political and Economic Aspects of the Sino-Africa Relationship
2. China‘s Outbound Investments into Africa‘s Resource Sector
3. The Future Trajectory of Sino-Africa Relations
4. Final Word

6. Page 6
The Beijing Axis 30
20,337
19,634
25,807
4,280
4,486
2,259
0
5
10
0% 5% 10% 15% 20% 25% 30% 35% 40%
Asia-Pacific
North America
Europe
Emerging economies are outperforming the developed world in terms of
economic growth. Asia is leading this transformation in the global balance
Regional GDP Comparison (USD bn, 2015F)*
*Note: Data based on IMF World Economic Outlook
**Note:Other Asia includes Bangladesh,Sri Lanka,Nepal, Pakistan, Bhutan,Burma, North Korea,Kazakhstan,Tajikistan, Turkmenistanand Uzbekistan.
Source:IMF 2012; The Beijing Axis Analysis
South America
Africa
Other Asia**
Developed economies are
expected to continue to lose
share in world GDP in the
coming years
Asia-Pacific is expected to
account for the largest share of
world GDP (34%) by 2015F
2011E to 2015F
2011E to 2015F
GDP Average Growth Rate (%, 2011E-2015F)
Forecast world
average GDP
growth until
2015F: 3.95%
% of World GDP (2015F)
Shaded bubbles represent
2011E figuresRising real incomes and
high commodity prices
will drive growth
BRICS
2015F GDP
(USD bn)
2011*Growth Rate
(%)
2010 GDP Per
Capita (USD)
China 10,903.6 9.2% 4,382.1
India 2,359.2 7.4% 1,370.8
Russia 1,926.1 4.1% 10,355.7
Brazil 2,546.7 2.9% 10,816.5
South Africa 425.6 3.1% 7,274.4
Bubble Size: Nominal GDP (USD bn, 2015F)
The Beijing Axis 31
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2010 2015F 2020F 2025F 2030F 2035F
China
India
Year
2010-
2015F
2016F-
2025F
2026F-
2035F
GDP Per
Capita 2035F
(USD)
China 8.0% 7.0% 6.5% 22,458
India 7.5% 7.0% 6.5% 6,070
2016F: China adds 1 Germany
2025F: China adds 2 Japans
2028F: China adds 1 US
2026F: India adds 1 Germany
2032F: India
adds 1 Japan
2010-2016
2010-2020
2010-2025
2010-2028
2010-2020
2010-2026
2010-2032
2020F: China‘s economy doubles
2020F: India‘s economy
doubles
Sustainable Growth Phase
Continued Acceleration
Drive to Maturity Phase
Growth Moderation Phase
2013F: India adds 1 South Africa
Now
2010-2013
China
India
Moderating Phase
China
India
Accelerating Growth
Box indicates additional nominal
GDP from now to forecast year
China’s and India’s Forecast Nominal GDP (USD bn, 2010-2035F*)
*Note: ForecastGDP growthrate for each period listed in the graphabove
Source:IMF; The Beijing Axis Analysis
China and India will add significant nominal GDP over the next 10 years
and beyond, yet the type of growth will differ
The Beijing Axis 32
Future developments in Sino-Africa economic relations
• China‘s share of trade with Africa has explodedin the last decade,making it Africa's largesttrade
partner
• While China‘s trade and investmentgrowth in Africa will be driven by its own need for resources, the
need to developconsumingmarkets that will buy Chinese goods and servicesis equallyimportant
• This will help openAfrica‘shuge potentialfor private consumption,as the need for manufacturedgoods
will remain strong whileAfrica continuesto develop its own manufacturingcapabilities
• China is playingan increasing important role in job creationand supply to the local market, evidenced
by the establish of free economic zones in the main financialand businesshubs of Sub-SaharanAfrica
• Anotherarea of opportunity isAfrica‘s infrastructuresector, as decadesof underinvestmentand
mismanagement have resultedin underperformingsectorsin railways,roads and power.A substantial
amount of work has been done in the last decade with the help of Chinese investment, but much more
needs to be achieved
The Beijing Axis 33
Current and future trends in China‘s development affirm the deepening of
ties with Africa
Slower economic growth
does not mean no growth
Its all about strategic
policy choices – Beijing
‘gets’ this
Moderate GDP
growth and
sustainable demand
for commodities
China will remain the
global engine for
resource demand
Understand the
variability, volatility
and exceptions
Increasing China’s
outbound investment
in the region
Implications for Africa
Current and Future
Trends Description
Moderating commodity
demand (moving towards
sustainability)
Exceptions will occur
Balance of risks shifting
Increased volatility
China will reengineer itself towards a more moderate growth phase with a
different set of drivers. Commodity demand remains solid
Rates of growth in resource demand during the super-cycle 2004-2008 were
unsustainable. Chinese policy makers allow a moderation in GDP growth
looking for sustainability
Commodity demand in China will be moderate but China remains the single
biggest global engine of resource demand and will be that for a long time to
come
There will be some (individual commodity) exceptions to high growth
commodity demand. It is necessary not to generalise about ‗China potential‘
but to understand the detailed supply/demand of each individual commodity
The one-way supply/price risk for buyers in a seller‘s market has now begun
to shift towards two-way risk where buyers and sellers will share risk
Volatility could increase as the market grapples with the reality that China
not be a one-way bet. Markets will adapt to the reality of more moderate but
more sustainable demand
Source:The Beijing Axis Analysis
1
2
3
4
5
6
Chinese outbound
investment will continue
China‘s outbound capital will continue to hit the headlines. Overseas
investment is moving beyond trade facilitation and natural resources
7
The Beijing Axis 34
China‘s significant financing potential and EPC capabilities provide a ‗win-
win‘ situation for Africa‘s growing need for infrastructure development
Source:The Beijing Axis Analysis
High Economic Growth – Growing Domestic
Demand
Significant Capital and Financing Appetite
What does China have to Offer?
Strong EPC CapabilitiesAcross All Disciplines
Renowned Africa/InternationalProject Experience
HedgeAgainst Global (Western) Risk
1
2
3
4
5
Need for Infrastructure Development
Limited Domestic EPC Capabilities
How does Africa Benefit?
Need for Foreign Capital Influx
Raw Material Export Market for Africa
Need for Foreign Capital Influx
Raw Material Export Market for Africa
Need for Infrastructure Development
Limited Domestic EPC Capabilities
Protection from Fragile Developed Market
Need for Foreign Capital Influx
Raw Material Export Market for Africa
The Beijing Axis 35
Agenda
1. Political and Economic Aspects of the Sino-Africa Relationship
2. China‘s Outbound Investments into Africa‘s Resource Sector
3. The Future Trajectory of Sino-Africa Relations
4. Final Word

7. Page 7
The Beijing Axis 36
Final word
• There are new markets that matter – a new competitivelandscapeis unfolding.China, India,Asia and Latin
America to be central in this reconfiguration
• China-Africa partnershipcomplex,very importantfor both sides; but China-Africa story is also relevant to
the entire world as these 2 fastestgrowing areas of the global economyinteract
• For China it is clear thatAfrica is a strategicimperative:
− Resourcesupply lines
− Markets for productsand services,jobs
− Political influenceand geostrategicobjectives
• Africa increasinglysees China/Asia for its full potential:
− Sell resourcesinto large, high-growth markets
− Seek capital and developmentpartners
− Find new areas for growth and projectdevelopment
− Access new technologyand talent
• Appreciatethe ‗outward-looking‘stance of Asian players – new global leadersare emergingin Asia and
they will act in global markets includingAfrica
• This new world brings about key trends,new realitiesand strategic issues – all actors are now
(re)interpretingthis future to understandthe driversof 1) broad trends and 2) exceptions – get close, be
informed and strategic
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