STAFF NEWS & ANALYSIS
Africa Emerges Alongside New China Meme
By Staff News & Analysis - March 26, 2013

China's Xi promises equal trade relations with Africa … China's new president sought to address concerns among African leaders about the uneven nature of trade relations on Monday, promising an equal relationship that would promote development on the continent … Xi will finish his trip in the Republic of Congo, from where China imports oil to fuel its economic growth. – CNN

Dominant Social Theme: Africa is really modernizing.

Free-Market Analysis: We promised viewers to keep them informed about the emergence of Africa as a dominant social theme and this article (excerpted above) is one more piece of evidence that we are on the right track.

The rationale for the African meme has to do with the construct created by the Anglosphere. The idea is that the US trades dollars for commerce and lifts up certain countries in the process. The first country was Japan and the next was China.

Now it is Africa's turn but with a twist. China seems to have been designated as a kind of economic "yellow peril" but in order to be a good – if controlled – adversary of the West, it will have to maintain its economic viability.

In our view the "Chinese miracle" is in large part the result of central banking stimulation and that stimulation was delivered by a US-style central banking system. But inevitably, China is failing now and badly needs new markets to replace US ones. Domestic consumerism doesn't provide the necessary demand.

Enter Africa. China along with the West is going to develop African resources and eventually build a catchment of African consumers. It is going to share the wealth with Europe and the US but this gambit will increase China's ability to weather the upcoming monetary storm.

Here's more from the article:

In what was billed by Chinese media as a major foreign policy speech, Xi said that China had done its best to help Africa's development and insisted on equality among all countries, irrespective of size, strength and wealth.

"Africa belongs to the African people," he said.

"In developing relations with Africa, all countries should respect Africa's dignity and independence," he added.

A lot is at stake. Africa is already a major source of natural resources for China and with African economies now some of the world's fastest growing, it's also an emerging a marketplace for Chinese-made goods.

Trade between Africa and China totaled $200 billion in 2012, according to Chinese state media, and the country is Africa's largest trading partner.

African leaders have welcomed China's no-strings investment as a counterbalance to Western aid that is usually conditional on reducing poverty, stamping out corruption or introducing democratic reforms.

… Adams Bodomo, African Studies director at Hong Kong University, says claims of neo-colonialism are overblown and that China's influence "was more positive than negative."

According to Xinhua, 85% of the staff employed by the more 2,000 Chinese companies operating in Africa were Africans.

"In 10 years, China has built a lot more infrastructure than, for example, Britain did in my own country — Ghana — for 100 years," Bodomo said.

In fact, it is likely no coincidence that China has built so much infrastructure so quickly and efficiently. This is due, as we indicated above, to the magic of central banking and money creation.

And this same formula will likely be applied to Africa as well. In the long run, such massive monetary forces leave countries bleeding and ruined. The US and Europe are good examples of monetary forces run amuck.

But in the short run such monetary stimulation can be tremendously successful and gives elite business leaders and top pols the ability to boast about the greatness of the capitalist model in lifting people out of poverty.

After Thoughts

Africa, for better or worse is on the agenda – with all that implies from a cultural, regional and of course investment perspective.

Posted in STAFF NEWS & ANALYSIS
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