March 23, 2017
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Selling dreams
China’s economic engagement with Africa China is in Africa for economic reasons. China is home to more than 19 percent of the world’s population but only six percent of the world’s land area. More than 500 million Chinese live on less than $2.50 a day. The country must remain on a high growth trajectory in order to raise these people  to middle-income status. An annual growth rate of seven percent, considered a bare minimum by China, requires enormous quantities of raw materials, including from abroad. China needs long-term supplies of raw materials and food at reasonable and stable prices. Since 2000, most raw materials and commodities have doubled in price and, despite the Great Recession of 2008, remain historically high. This is thanks to emerging market demand, and production and infrastructure constraints. China looks at Africa primarily as a source of raw materials; the West, on the other hand, is increasingly looking to market consumer goods to the small but growing African middle class. A sort of division of labor is emerging with Western aid focusing on health, education, rural development and governance, while China specializes in “infrastructure for natural resources” transactions. China’s foreign reserves-estimated at 3.5 trillion dollars-give it ample room to invest massively abroad. Conveniently, these investments keep Chinese engineering, construction and equipment suppliers busy, while allowing Chin
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