China expanding in SA - Political Forum

africanhope · 10-26-2007, 02:06 PM

Yesterday a deal was finalised between the largest bank in China and one of our major banks Standard Bank, in which the chinese group bought 20% of Standard Bank. This transaction is wort 6bn Rand (our local currency), the biggest single deal in SA;'s history, even larger thanwhen Barcleys took controll of our sencond largest bank last year.

Today, already, the Rand reached is highest level in many years against the dollar (not really a good thing for a developing market) and record gains on the Johannesburg Stock Exchange.

There are mixed feelings in SA about it, about our economy being sold to forgeigners (first ABSA, no Satandard), and about China playing such a large role in SA and Africa. Personally I am a bit worried about it all, but economics is not my strong suit. Any thoughts?

AH

Brother Oz · 10-26-2007, 05:13 PM

In purely economic terms, this is probably a good thing. Firstly, while yes the dollar is now more expensive, you've basically been given 6 billion Rand's worth of foreign currency, which you can use to get 6 billion Rand's worth of Chinese goods for your populace.
Also, it boosts confidence in your economy, which encourages investment, as you can see by the rise in the stock exchange. Investment is what a developing economy desperately needs.
Of course, stock increases may attract speculators, and there's nothing good about them on a macro-scale, look what they did in East Asia in the mid 90s.

Politically, it's more worrying. China has no compunction against propping up corrupt dictators. That's not really a problem in South Africa, but it may be in many other African states.

africanhope · 10-27-2007, 12:35 AM

Well, the Bank has anounced that it will not use the money in SA, so we ar not getting that value. Standard bank is already in something like 28 countries, 18 of them in Africa, and seays it intends to use that mony to expand their forgeign presence.

AH

Brother Oz · 10-27-2007, 12:12 PM

Well, in that case there isn't really any benefit for South Africa at all then. There is for other countries though. And of course, money might be siphoned from them to the South American owners of the bank... and 20% to the Chinese owners. Which is money going out of Africa.

Luke · 10-28-2007, 02:17 PM

Quote:

Originally Posted by Brother Oz

Well, in that case there isn't really any benefit for South Africa at all then. There is for other countries though. And of course, money might be siphoned from them to the South American owners of the bank... and 20% to the Chinese owners. Which is money going out of Africa.

Chinese investments in South Africa not only benefit people in SA, they also benefit many African countries where that bank has business. The Chinese investments can easily be poured into African countries to help improve the infrastructure, and African products have a much larger market in China. The old European masters in Africa can no longer incapacitate, exploit and enslave African people.

Brother Oz · 10-28-2007, 08:21 PM

Quote:

Chinese investments in South Africa not only benefit people in SA, they also benefit many African countries where that bank has business. The Chinese investments can easily be poured into African countries to help improve the infrastructure, and African products have a much larger market in China. The old European masters in Africa can no longer incapacitate, exploit and enslave African people.

As AH said, they are not going to use the money to invest in South Africa. So it doesn't benefit South Africa.
They may use it in other African countries, which is of course good for those countries, as I said.
I don't see that it has much to do with Europe at all.