China loans billions to South Africa for infrastructure

China and South Africa signed deals totalling $6.5bn during President Xi’s four-day tour of the country last week.

We are good friends and good brothers who understand and support each other with equality and mutual trust– Xi Jinping, China’s president

Among the agreements is a $2.5bn loan to Transnet, South Africa’s state-owned rail operator, and a $500m loan for the Eskom, the hard pressed state power company, for nuclear co-operation.

The loans will also be used to buy Chinese made mechanical and electrical equipment.

During the visit Xi sought to reassure his hosts that China would still act as the prime mover for Africa’s economies, both in terms of investment and as a market for African raw materials.

"China and South Africa are large developing countries and emerging markets, and we are good friends and good brothers who understand and support each other with equality and mutual trust, comprehensive cooperation, win-win reciprocity and common development," Xi said, according to a communiqué from the Chinese embassy in South Africa.

The recent slowing of the Chinese economy, and a fall of 40% in Chinese investment in the first half of the year has caused concern in Africa.

Earlier in the week, Xi visited Zimbabwe, a stop that resulted in the signing of 10 economic agreements, including the expansion of the southern African nation’s largest thermal power plant.

Isolated from the west, Zimbabwe’s president Robert Mugabe has turned to China for investment in transport, power and water. Now the China’s Export Import Bank has agreed to provide more than $1bn for a 600MW expansion of Hwange thermal power station, to be undertaken by China’s Sinohydro.

The funding is the final element of the $1.5bn deal, which was agreed in principle in October last year.

Photograph: Presidents Xi and Zuma at the welcoming ceremony for the Chinese delegation in South Africa, 4 December 2015 (Chinese Embassy)

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