Bilateral cooperation between China and African nations have gradually shifted beyond infrastructure development and trade to cover areas such as finance. CCTV’s Liu Xinqing reports.
Financial cooperation is greatly needed to push Sino-African relations a step further. China became the largest trade partner to Africa in 2009. Bilateral trade volume has grown to exceed $220 billion in 2014 and more than 2,000 Chinese enterprises are now investing in African energy, power, and infrastructure development. None of these achievements could have been realized without financial cooperation.
Underdeveloped financial systems in Africa cannot meet accelerating economic growth and many Chinese financial institutions are working to alleviate that.
China and African nations increase financial cooperation to build opportunitiesBilateral cooperation between China and African nations have gradually shifted beyond infrastructure development and trade to cover areas such as finance. CCTV's Liu Xinqing reports.
In 2008, ICBC spent $5 billion to acquire 20 percent of shares from Standard Bank Group, the largest bank in Africa. This was the largest financial investment made by Chinese banks overseas.
“The strategic cooperation between these two banks plays an important role in promoting the expansion of Chinese companies in Africa and providing financial support for bilateral trade,” CEO Of the ICBC Africa Wang Wenbin said.
Financial cooperation between China and Africa started as early as 1985 when the Chinese central bank, the PBOC, initiated cooperation with the Africa Development Bank. China became the largest lender to African countries in 2010, exceeding even the World Bank.
Earlier this year, the Chinese Central Bank also signed an agreement on currency swap of 30 billion yuan ($4.7 billion) with the South African Reserve Bank. The China Construction Bank also opened its second branch in South Africa this September.
But Chinese financial institutions are not just providing money, they are also exploring the most efficient areas for financial investment.
“Infrastructure projects like railway, road, power and telecommunication, require lots of investment, but most African countries are not in a position to finance these projects on their own,” Wang said.
“We provide financial support through equity participation or direct loans. Meanwhile, there are a lot of mergers and acquisition opportunities in power and energy sector which are of great interest to Chinese investors.”