A Chinese property company has pledged to build South Africa a new financial hub. On Nov. 4, Shanghai Zendai unveiled plans to transform Modderfontein, a manufacturing district in eastern Johannesburg, into a multi-use financial center “on par with cities like New York… or Hong Kong,” said Zendai chairman Dai Zhikang. The firm said it will spend about $7.8 billion on the development over the next 15 years.
The development—which has yet to be named and will include some 35,000 houses, an education center, and a sports arena—marks a departure from past forms of Chinese investment in Africa, many of which have drawn criticism. Over the past decade, state-owned and private Chinese firms have been been building African roads, railways, ports and other infrastructure in exchange for access to minerals and oil—a relationship that’s led some to call China a “neocolonialist.” Chinese state oil firms now face resistance from their former partners in Niger, Chad, and Gabon.
As a result, Chinese leaders have been paying lip service to investment that brings more direct benefits to African countries in the form of jobs or support of non-resource related industries. It makes sense then that Zendai stressed what the financial center would bring to Africa’s largest economy: jobs for 100,000 people and a hub for Chinese investment in Sub-Saharan Africa. Zendai says 70% of housing in the complex will be reserved for black middle-class families.
Whether or not these benefits materialize, the financial center is evidence of shifting forms of Chinese investment, at least in South Africa. South Africa’s top exports to China are iron ore, steel and other metals and Chinese investment in South Africa tilts toward the extractive industry. Between 2007 and 2008, the six largest Chinese investments (pdf. p. 68) in the country were in the mining industry.
But that has started to change. Chinese telecom firms provide equipment to South Africa’s telecom industry. Beijing Automotive Works invested RS 196 million ($19 million) in a new taxi plant in the country last year. In August, a Chinese company bought a wine cellar and vineyards in South Africa, the first kind of such investment by any Asian firm. China’s state television also bought a stake in one of South Africa’s biggest newspaper chains. The idea of China’s state television network controlling part of South Africa’s media—may raise some concerns, but it’s only fair turnabout: South African media company Naspers owns nearly a third of high-flying Chinese Internet firm Tencent.