Business & Investment

Rise of China Inc — China’s two-way trade with Africa

Investors often look back from headline to headline and make reactionary decisions.

But if you want to reach out to the commodity market, you need a risk-resistant stomach … and you have to think in the long run.

A friend of mine – And editor Whiskey and gunpowder In USA — Byron King pointed out the difference between investors and government a few years ago.

Investors think of the moon … Government thinks of the year.

But, as Byron once told me, the Chinese government For centuries..

They are centrally planned economies. Their government hasn’t planned for months or years … they will make strategic moves based on the results decades from now.

And importantly, that all leads to the rise of “China Inc”.

Think in decades, not years

The US-led trade war and the subsequent coronavirus have not hampered the long-term thinking of the Chinese government. Simply put, the Middle Kingdom is more focused on the long-term needs of its people.

Take oil as an example.

China almost completely relies on external sources.

They have strategic partnerships with non-US allies, not to bother the United States, but to allow them to run their cities.

China is working to end the need for external sources to keep things inside.

Part of ending our dependence on oil is to switch the entire city to electrical energy.

For example, Shenzhen has moved 16,000 public vehicles to all electric vehicles. In the coming months, all 22,000 taxis in Shenzhen will be powered by electricity.

Oh, all of these are supported by 40,000 charging stations in the city.

And it’s just one city.

In 2018, there were 425,000 electric buses worldwide. Almost 99% of them were in China.

To launch, China is building some “electric Detroit”. In other words, building a mini-city that will be the hub of electric vehicles. It reflects the return of the US city of Detroit to its peak.

China is actively moving away from worrying about where its energy sources come from in order to keep a billion people moving.

And this is just the beginning …

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China Inc Funds Africa

We talk a lot about how Australia tied its economic wagon to China.

Two-way trade totals $ 235 billion annually.

But here’s something you might not know.

China’s two-way trade with Africa amounts to $ 310 billion.

All of these are trends that Brian King has tried to warn investors in the last few years. And if he is right, China’s investment in Africa will only increase.

Take a look at this map of Africa:

The only place where China is not spending money

Do you see all those orange sections?

They are the only country in Africa China it’s not I am doing business with.

There are a total of 54 countries that make up Africa, and China does not invest in only eight of them. Yes, China is effectively spending money on 75% of the African continent.

More importantly, one site estimates that there are more than 10,000 companies operating in China in Africa alone.

Do you see all those little blue boats around the African coast? They are ports with “Chinese Engagement”.

The problem — and this is what Byron is having a hard time pointing out — China isn’t just going there and digging rocks.

China’s US dollar investment in Africa

China builds roads, dams and railroad tracks and invests in domestic agriculture and technology, as well as critical infrastructure.

The rise of these two relationships is the power of “China Inc.” In short, the Middle Kingdom guarantees that no matter how much future needs are met.

Where does Australia fit?

Relations between Australia and China are weak. And this is not because Australia is being dragged into a trade war with the United States.

The Chinese Communist Party is making strategic moves to countries with products that are very similar to resources. In fact, as Callum Newman and I discussed earlier in the week, YouTube channelFrankly, Australia may not have been China’s major iron ore supplier for much longer.

As Cal points out, the “grade is king” and the Middle Kingdom wants higher grade iron ore. Check what he had to say here.


Shae Russell's signature

Shay Russell,
Editor, Daily Reckoning Australia

Rise of China Inc — China’s two-way trade with Africa Rise of China Inc — China’s two-way trade with Africa

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