China has announced restrictions on foreign investment in some of its key industries.
Sectors falling under this new restriction include property, financials, oil and rare metals, while investment in cleaning up the environment and developing renewable energy will be encouraged (Business Report).
The move is being seen as an attempt by Beijing to slow down its booming economy, but the turn towards protectionism has some analysts worried. It also flies in the face of China’s own investment strategies in Africa.
According to reports, Industrial and Commercial Bank of China (ICBC) is prepared to pay R36,67 billion for 20 % of our very own Standard Bank (Mail & Guardian). If it comes off, it will be the biggest overseas acquisition by a Chinese bank to date.
The world has been aware of Beijing’s moves to encourage Chinese economic expansion abroad, particularly in resource rich developing countries. But until now Chinese investment activities in Africa have focused on mining and infrastructure projects. This new foray into the African financial services signals the extent of China’s interest in Africa.
Does this mean that Standard Bank with its network of 713 branches in South Africa and 240 in the rest of Africa is going to be the tool via which China will consolidate its economic influence over Africa (Fin24)? It certainly appears so.
Will Standard Bank in turn be allowed to conduct a massive investment in China’s financial sector? It appears not.
On one level the deal is good news for South Africa.
Certainly we could do with a massive injection of foreign currency. Unlike China we are not blessed with an abundance of foreign reserves. But aside from the economy, how will all this cash affect South Africa?
China makes no secret of the fact that it is not interested in influencing the politics of the countries it invests in. Unlike money from Western sources, Chinese loans do not come with political strings attached. A fact looked on with favour by many African leaders. However, who gets the money will certainly have an effect on who gets to play on the South African political stage.
This massive investment is clearly going to have an influence on our democracy and just at a stage when it is starting to wobble slightly.
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HAAP Media Ltd
Very beautifully, thx