Economic Woes not Stopping China--Except in DRC

Here is an excellent article on China's continuing expansion in most of Africa, although the global slowdown is having an impact on China's investments in Congo. Money quotes:

"Some developed Western countries hit by the financial crisis are reducing their investment in Africa. Objectively, this is a powerful opportunity for Chinese businesses to expand their investment and market share in Africa," Cui Yongqian, a former Chinese ambassador to the Democratic Republic of Congo and Central African Republic, told a China-Africa trade forum this month.

On the other hand, China is reducing its commitments to the DRC:

However, the global slowdown has forced some Chinese businesses to close operations in Africa and prompted a re-think of some of the multi-billion-dollar mega-deals that blazed a trail across the world's poorest continent.

Democratic Republic of Congo and Guinea are cases in point.

DR Congo rode the boom in commodities to attract a wave of foreign investment in its rich but long-neglected copper, cobalt, gold and other mineral resources after post-war elections in 2006. Now that dream is fading.

"We have one processing mill and several workshops in Congo. We have closed them. There are many Chinese-invested firms in Congo and I understand most of them have shut down their operations," said a marketing director at a private firm in China's eastern province of Zhejiang, which supplies cobalt and nickel compounds for use in mobile phone batteries.

"I don't think we will resume production in the factories in Congo any time soon. We expect the economic slowdown could worsen in this year and weigh on the prices further," he said, requesting anonymity because he was not authorised to speak to the media.

Africa's heavy dependence on resource exports means it feels any squeeze more painfully. Global trade fell an annualised 3.7 percent between September 2008 and November last year, its biggest drop since 2001.

Congo's franc has fallen 20 percent against the dollar in less than four months and foreign reserves are at a five-year low. The government is seeking a $200 million bailout from the International Monetary Fund's Exogenous Shocks Facility.

A much-trumpeted $9 billion package of Chinese loans, investment and infrastructure projects in return for Congolese minerals contracts may be cut back to $6 billion, a diplomat in Kinshasa said, partly to appease the IMF which has expressed voiced concern at Congo taking on such huge debts.