Some of these won't work

China/Africa: Chinese growing investment in sub-Saharan Africa is both a huge global development and a short-term bubble. Both sides will benefit, but there may need to be some pain first. In 2008, China’s $106.8 billion bilateral trade with sub-Saharan Africa made it the region’s largest trading partner, surpassing the US’s $104.6 billion. The Africa-China trade is close to balanced, while Africa’s exports to the US, mostly raw materials, are worth five times as much as its imports.

Like the Americans, the Chinese are mostly interested in key raw materials, especially oil. The China National Offshore Oil Corporation (CNOOC) is in heated rivalry with ExxonMobil over a $4 billion investment in Ghana’s offshore Jubilee field, and is said to be bidding over $20 billion for some 23 Nigerian oil exploration blocks currently controlled by Shell, Total and Chevron. The Chinese government is also in discussions with Kenya about a $3.5 billion port investment to provide an additional outlet for Chinese oil from southern Sudan.

Chinese investment in Africa takes two forms, capital and labour service contracts to employ both Chinese and African workers. In the first half of 2009, China’s cash investment totalled only $552 million, but labour service contracts totalling $22.4 billion were signed, up 25 per cent from the previous year.

While raw materials are still the centre of Chinese attention, the boom at home has provided funds for ventures in other fields, some more sensible then others. China is building a WiMax communications network in Kenya. That may make economic sense, but plans to make Zimbabwe the African centre for solar panel manufacturing must surely be optimistic. From Africa’s point of view, Chinese investment is very welcome; it is a second investment source to the US multinationals, with significantly different characteristics. The two countries’ competition in Africa may well have contributed significantly to that continent’s much better growth record in the 2000s compared with previous decades. Nevertheless, such enthusiasm from so many Chinese investors must be creating some bubbles. Popping will be hard to avoid.