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China looks to Africa for expansion & trade ties

From The Australian

THE China-Africa Development Fund, which was founded by state-owned lender China Development Bank Corp, plans to raise $US2 billion ($2.45bn) by November to help expand business links between Africa and China, CDB vice-governor Li Jiping said in Beijing today.

Separately, China's Communist Party leaders vowed yesterday to continue their focus on steady economic growth, carrying on with an active fiscal policy and moderately loose monetary policy in the second half. 

The politburo plan to maintain Beijing's expansionary policies is likely to damp growing calls by economists for the government to fine-tune policy to avoid future inflation or asset-price bubbles. Such calls have strengthened as economic growth in the second quarter quickened to 7.9 per cent from 6.1 per cent in Q1, amid a huge wave of government-driven lending and investment projects. 

Justifying its expansionary stance, the politburo warned that the foundation of the economic recovery was not firm, and said many economic uncertainties remained. 

Chinese exports continued to shrink in June, though there were signs of stability emerging. Still, the politburo noted positive economic factors, and suggested the government would increasingly focus on the quality of economic growth, rather than just the pace. 

Wang Qing, an economist with Morgan Stanley in Hong Kong, said: "On the one hand, they want to signal that they are keeping the overall policy stance. But on the other hand, they want to ensure the quality of investment.” 

In an interview on the sidelines of the Australia-China Bilateral Investment Seminar, the CDB’s Mr Li said the China-Africa Development Fund would raise the money for expansion from Chinese financial institutions, including insurers. 

The fund, established in 2007 with an initial $US1 billion investment by CDB, had said it aimed to eventually increase its total assets for investment to $US5 billion. 

Australia was also a part of the CDB's global strategy, Mr Li said.

So basically China is investing in infrastructure projects that will ease access & operation of commodity based assets in Africa, thats payoff number one, my expectation is that they will then look to these markets to start absorbing excess Chinese prodution of consumer goods that we in the West are unable to purchase.