April 17, 2014 2:56 am JST

China, West learning team play in African investment

TOKYO -- Chinese companies are showing they can work alongside their Western peers in Africa, not just vie with them for the continent's plentiful resources.

     Last month, South Africa's biggest-ever infrastructure contract went to an East-West quartet. Chinese rolling-stock makers CSR and China CNR will join American conglomerate General Electric and Canada's Bombardier in filling the roughly $4.67 billion order for 1,064 freight locomotives for Transnet, a state-run transport group.

     Transnet picked four suppliers to ensure the locomotives are delivered by a strict 2017 deadline, a senior official said. The company also reckoned that the pairing made good economic sense.

     In Zambia, Chinese telecommunication equipment maker Huawei and Bombardier were chosen last month to outfit a roughly 1,000km rail corridor with a communication system developed in Europe.

     Poor infrastructure is keeping Africa's dynamic economies from growing even faster. Efforts to overcome this handicap are underway across the continent. In Kenya, for instance, Chinese contractors are laying roads and upgrading ports.

     Eager to gain such footholds, the Chinese have fought tooth and nail with their more experienced Western rivals. Chinese direct investment in Africa had reached $15 billion by 2011, well bellow the more than $55 billion pumped in by the U.S. and France each, according to the United Nations Conference on Trade and Development. But when lending is counted along with investment, China is closing the gap with the West in Africa.

     The emergence of cooperation between these camps attests to Africa's changing needs. Project costs have tended to overshadow other concerns, but African countries are increasingly demanding both quality and quantity. South Africa's order for high-tech, energy-efficient locomotives is a case in point.

     Chinese companies have their own reasons for embracing team play. Investments in Africa's natural resources do not always go off without a hitch, as China has found out in the oil fields of South Sudan. Partnering with American and European companies can help hedge the risk of trouble, as well as ally concerns in some African capitals about becoming too dependent on Chinese money.

     China's presence in Africa has grown formidable. Annual flows of Chinese direct investment are quickly approaching American levels.

     "Despite a somewhat competitive stance from the U.S. on China's actions in sub-Saharan Africa, the U.S., China and Africa have the potential to benefit from unified engagement" in such areas as trade and investment, argued the Brookings Institution, an American think tank, in a 2013 report.

(Nikkei)