CAPE TOWN (Reuters) - Chinese Vice President Xi Jinping began a trip to mineral-rich South Africa on Tuesday aimed at securing resources for the Asian economic power, looking to extend its influence in the African continent.
Beijing sees global mining power and regional financial services leader South Africa as a vital source of commodities to fuel its rapidly expanding economy and industries and as a stepping stone to access other African states.
Xi, pegged as China’s next president, is on a three-day official visit to Africa’s largest economy, which exports about $5.5 billion a year in minerals to the state and has been increasingly a destination of Chinese foreign direct investment.
The Chinese delegation and South Africa are expected on Wednesday to sign a bilateral memorandum of understanding for co-operation in geology and mining, and a letter of intent related to South Africa’s energy sector, among others.
“It makes sense that China’s political diplomacy marries that desire to reshape the world with Africa’s participation,” Jeremy Stevens, an economist at Standard Bank told Reuters.
Standard Bank, the largest on the continent is 20 percent owned by the Industrial and Commercial Bank of China, in an arrangement analysts felt could foster increased Chinese investment in the continent but has yet to yield major dividends.
Chinese investors are frustrated with a South African bureaucracy seen as more cumbersome than other major mining countries like Australia. Implementing resource deals that include infrastructure investments to unlock commodity delivery bottlenecks are also concern, an expert on China-Africa relations said.
“We don’t get to fully leverage the opportunities that China presents us, from an investment perspective, a trade perspective and a market access perspective,” said Martyn Davies, CEO of Johannesburg-based Frontier Advisory.
China is South Africa’s biggest bilateral trading partner and the focal point of its plan to divert more trade and investment from traditional markets in Europe and North America to the world’s fastest growing economies.
But China also serves as a model of state action in the economy, with Pretoria hoping to join it in the BRIC -- Brazil, Russia, India and China -- group of fast emerging economies.
But a “BRICSA” grouping seems unlikely for now with South Africa growth projected at 3 percent this year, hardly the blistering pace of other members. Its economy is also less than a quarter of the size of the smallest BRIC economy.
Xi next travels to oil-rich Angola and Botswana in visits seen as helping China’s energy and resources security.
China’s mineral diplomacy has been criticised for its secrecy and bolstering a few governments Western states accuse of human rights violations.
A senior World Bank executive said Chinese companies eyeing African mineral resources must stop making closed-door deals and become more transparent in their investments.
South African President Jacob Zuma visited China in August, seeking to increase bilateral financial flows and for ways to narrow his country’s two-way trade deficit, which hit $2.7 billion last year.