Wednesday, February 07, 2007

China advances on Africa. Will ag be next?

China increasingly looks to Africa for oil and other raw materials. Chinese President Hu Jintao has just completed an 8-nation tour of Africa, and the Chinese are pumping billions of dollars into developing African infrastructure in areas like mining, railway transportation and oil.

Ag production doesn't seem to enter into China's plans yet, but that would appear to be a natural extension of trade connections. It wouldn't mean that the Chinese were directly farming in Africa, but the country has the resources to bolster Africa's production of crops like cotton.

China already buys a certain amount of cotton from Africa, although westerners who know about the Chinese cotton industry say it tends to be of relatively poor quality.

However, with technical guidance and some of those U.S. dollars that China has banked away, it could theoretically move African production more toward its desired standards. China is pushing to modernize its ginning sector, replacing 10,000 mostly antiquated gins with 2,500 modern facilities. How much trouble would it be to ship those less-efficient gin stands to Africa where they probably would be better than most of the local equipment?

China recently moved past Great Britain to become Africa's third largest trading partner, with the U.S. and France in the first and second spots, respectively.

Back in the 1980s, the Japanese helped finance some of the infrastructure improvements in South America countries that allowed Brazilian farmers to expand their agricultural reach. So, a push into African agriculture by China isn't that far fetched.

China has a couple of advantages when dealing with African countries. First, it was never a colonial power, so there's no negative history with African nations. Second, during the Cold War when many African countries were swinging toward socialism, China provided financial and technical support and built early relationships in parts of the continent.

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