George Fang, Standard Bank Group's Head of Mining and Metals in China, says: "The race for Africa's mineral resources continues to gather momentum. Continued growth in consumption resources is being driven by growth in China and the rest of Asia. Chinese companies are increasingly acquiring assets, as are Indian companies, prompting other global miners into a race to secure mineral assets of theirown. This movement for resources can be to the benefit of the African continent."
Underpinning Standard Bank Group's projection that growth will continue for decades and possibly still accelerate further, Mr Fang says the rate of urbanisation in China isstill well below the rate of other countries at a comparable period in their development. China's urbanisation is 45%, compared to 73% in the United States (at the comparable development era), 88% in the UK and 74% in Japan.
The scale of China's urbanisation has never been seen before and is stillaccelerating. Every year approximately 27-million people move from the countryside to cities. China already has some of the biggest cities in the world, and people are increasingly being attracted not to the massive coastal cities, but to second and even third-tier inland cities. There are 90 cities in China with populations of one million, and these are beginning to feel the influx. Fang said some of the strongest economic growth was occurring here.
One symptom of this unprecedented growth is an almost insatiable demand for natural resources to feed expansion, and China has the capital to acquire them. "Historically, China has not been a major foreign investor in mining, but over the past five years that has changed. The number of deals that China is initiating has grown exponentially on every continent, but especially Africa," explains Mr Fang
"China is adding infrastructure capacity to link resources in countries as diverse as Mauretania, Sudan, Nigeria, DRC, Gabon, Angola and Zambia. This type of strategy is key to China's investment on the continent. Thus making the investment viable but also leaving a future economic legacy for the host country, " says Mr Fang.
"China is creating more dollar billionaires than any other country, and this is a sign of a consumer market of some buoyancy. China will soon overtake Japan as the second biggest market in luxury goods," says Mr Fang.
Even more startling in its scale, says Mr Fang, is China's ascent up the technology ladder. He believes China will accomplish within years what took other countries decades. This will not be achieved by original research, but by using its massive foreign currency resources to cooperate with foreign companies and their technology.
He gives the example of China's auto industry. "Decades ago this industry barely existed, yet within three years there will be no significant gap in technology between Chinese domestic cars and their foreign counterparts, except in theluxury car market niche. China is also implementing green technology fasterthan any other country."
It is this ascent that Fang believes will enable China to take its place as a global financial leader, as Chinese exporters start evolving into more value-added manufacturers able to command premium rather than discount prices.
It is this growth from which Africa will derive benefit. Now is Africa's time. For many years Africa has been excluded from the economic growth experienced in the more developed world. However, Africa is resource rich, has a growing educated population, and will prove to be the engine that will provide growth to world economies for the next few decades. The benefits to Africa are clear. Resource and infrastructure investment will be followed by the development of a growing industrial and services sector.
Mr Fangs says: "The African picture is changing. Spearheading Africa's aggregate growth performance are the relatively low-cost providers of natural resources thathave benefited from the surge in Asian demand. Along with this demand has come the reciprocal development of infrastructure by the likes of China. Physical infrastructure is essential to propel agriculture, manufacturing, services,trade and even human capital enhancements, while rising incomes and rapid industrialization drive demand for electricity, transport, telecoms and housing. Resource andinfrastructure investment will leave a legacy that will continue to build and enhance the economic status of the continent, drive economic growth and ultimately benefit the continent's people."
Geographically, Standard Bank is positioned as the institution of choice for mining transactions and investments into Africa. Standard Bank has a presence in 17 countries on the African continent and in 15 countries outside of Africa. Natural resources are an established element of Standard Bank Group's DNA.
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