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Insight:InAfrica'swarmheart,acoldwelcomefor Chinese
5:00amEDT

ByEdCropleyandMichaelMartina SALIMA/BEIJING(Reuters)Malawiansbilltheircountryasthe"Warm HeartofAfrica"andpridethemselvesonareputationforfriendliness.But JaffaShaibu,aburly32yearoldmerchantinaclothesmarketinSalima,a dustytownneartheshoresofLakeMalawi,feelslessthanwelcomingto theChinesetraderswhohavemovedinoverthepastfouryears. "Thewayitlooks,onedaytherewillbeabigfightwiththem,"Shaibusaid. "Onedaytherewillbeblood." EchoingagrievanceheardacrossAfrica,Shaibuandhiscolleaguesinthis townof40,000complainofChinesebusinessmenwithbetteraccessto cheapimportsofclothes,shoesandelectronics,anddeeperpocketsthat allowthemtoreducetheirmargins. ThatsentimentispartofagrassrootsbacklashagainstBeijing'sincreasingdiplomaticandcommercialcloutinAfrica. Inmanyways,therelationshipbetweenthetwohasneverbeenstronger.Bilateraltradehasalmostdoubledoverthepast threeyears,to$166billionin2011from$91billionin2009.InJuly,ChinesePresidentHuJintaoofferedAfrica$20billionin cheaploansoverthenextthreeyears.China,hesaid,wouldforeverbea"goodfriend,agoodpartnerandagoodbrother"to Africa. ButagrowingnumberofAfrica'sbillionpeoplearelessenthusiastic. LastNovember,fourChineseinruralSouthAfricawereburntaliveinanarsonattackontheirhome.InZambialastmonth, minersinadisputeoverpaycrushedaChinesesupervisortodeathwithacoaltruck.InGhana,armedChineseinformal minershaveclashedwithgangsoflocalyouths,triggeringagovernmentcrackdown.InAngolaafewweeksago,37Chinese menweredeportedonsuspicionofrunningacriminalgangthatburntitsvictimswithgasolinebeforeburyingthemalive, accordingtoChina'sXinhuastatenewsagency. AndfromSenegalinthewesttoKenyaintheeast,tradersareupinarmsaboutwhattheyseeasunfaircompetitionfrom privateChinesemerchantssurfingintoAfricaonthebackofawaveofbiginvestments. SLOWSLOW ThebacklashhasreachedpartsofMalawi,anationof13millionpeople,whereantiChineseprotestsinthenortherntownof KarongainlateJunepromptedthegovernmenttodustoffadecadesoldlawthatconfinesforeignretailerstobigcities. Sofar,thegovernmenthasnotforcedtheissue.Salima'shighstreetisatattystripoftarmacflankedbydustysidewalksand 200metersofshophouses,includingnineownedbyChinesetraders.There,theendofJulydeadlinetomoveoncameand wentwithoutaflicker. FuxingTrading,PengHengShopandtheotherChineseoutletscontinuetooffertheirwaresasbefore,feedingabeliefthe governmentwillnotactagainstanythingevenvaguelyconnectedtoBeijing. ChineseconstructionfirmshavejustcompletedahugehotelandconferencecentreinthecapitalLilongweandarebusy buildingschoolsandupgradingthemainroadtoTanzania. "Thegovernmentisslowslow,"saidNoelZenengeya,aportly48yearoldSalimamerchantinadazzlingHawaiianshirt."If theydon'tdoanything,wewillhavetofightforit." TheauthoritiesacknowledgethebadbloodandinsistChinesemerchantsanestimated140businessesacrossthecountry willbemovedtothethreebiggestcitiesasstipulatedbylaw. TheChineseembassysaysitdoesnotopposethemove.AmbassadorPanHejunhasappealedtoChinesebusinessesto movetodesignatedareas"torespectprinciplesguidingthedevelopmentofChinaMalawirelations." Atthesametime,Malawianofficialssensetheycanonlygosofarbeforeannoyingtheirgiantbenefactor. "It'saverybigissueandpoliticallysensitivebecausetheChinesehavebeenveryhelpfultoMalawi.It'sbecomingtrickyhow

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wetreattheirnationals,"SalimaDistrictCommissionerAliPhiritoldReuters."Butweanticipatealotofconflictiftheydon't move." TRADEIMBALANCE Astradehassoaredalmost20foldinthelastdecade,thebasicnatureoftheexchangehasnotchanged:rawAfrican materialsoil,ore,timberfloweast,whilemanufacturedgoodsflowwest. Malawi'scaseistypical. Itsent$46millionoftobacco,coffee,spicesandotheragriculturalgoodstoChinalastyear,andinreturnbought$112million oftextiles,machineryandhightechgoods. EvenSouthAfrica,farandawaythecontinent'sbiggestandmostindustrializedeconomy,aswellasamajorcoalandiron oreproducer,facesanimbalance.InBeijinginJuly,PresidentJacobZumasaidthetraderelationshipwas"unsustainablein thelongterm". Facedwithanofficialunemploymentrateof25percent,SouthAfrica'srulingANCtalksincessantlyabouttheneedtoboost domesticindustry.Inparticularitwouldliketoseeitsmineralsprocessedathome. Buttheproblemrunsdeeper:partsofSouthAfrica'smanufacturingsector,nearly20percentoftheeconomy,areindirect competitionwithChina,andinmanycasesarelosingthebattleagainstamuchcheaperproducer. AccordingtoarecentstudybyeconomistsatBritain'sUniversityofEastAnglia,SouthAfricalost78,000manufacturingjobs toChineseimportsbetween2001and2010. GoodsofChineseoriginaccountedforabout18percentofSouthAfrica'simportsofmanufacturedgoodsin2010,upfrom2 percentin1995,thestudysaid.Laborintensiveindustriessuchastextiles,clothing,footwearandfurniture,havebeenthe hardesthit,withmorethan40percentoffootwearandknittedfabricspurchasedinSouthAfricacomingfromChina.Chinese importshavealsocutintoSouthAfricanexportstootherAfricancountries. "Theeconomyhasn'tbeenabletoabsorbthelaborforce,andofcoursethemanufacturingsector,farfromabsorbinglabor,is expellinglabor,"saidRhysJenkins,oneoftheauthorsoftheBritishstudy. ONECIGARETTEATATIME Likeconsumersaroundtheglobe,Africanshaveaninsatiableappetiteforcheapgoods,andChinasuppliesthemlikeno other. Africahasenjoyedaverageeconomicgrowthof5percentinthelastfiveyears,andthisyearcontainsfiveofthe10fastest growingeconomiesaccordingtotheInternationalMonetaryFund:SierraLeone,Niger,Angola,LiberiaandGhana. Butdisposableincomelevelsremainverylow,definingthewaymanyAfricansbuythings.Hawkerssellingindividual cigarettesareacommonsightatbusstopsthroughoutthecontinentmanypeoplecanonlyaffordtobuyoneatatime.It'sa similarstorywithclothesorshoes:wherethecheapChineseoptionbeatsoutlocallyproducedgoodsirrespectiveofthe quality. "Inthepast,Iusedtobuyfromthelocalmarket,butnowwiththepricesintheChineseshops,Ibuyfromthem,"saidEnifa Mbeleko,a35yearoldMalawianmotherofsixwhotooka50km(31mile)busridetoshopforablouse."I'veneverhada problemwiththequality." SHIFTINGTOAFRICA Africa'sgrowingpowerasaconsumermarkethasregistered11,000kmawayattheotherendofthesupplychain,where there'snewrecognitionthatthecontinentisoneofthefewbrightspotsinagloomyworld. IntheeasternChineseprovinceofHenan,ShaoYalisitsinherofficeatKaifengTianyiGarmentssketchingoutvarious commercialstrategiesonhercomputers.TheeurozonecrisishashammeredexportstoEurope,theclothingfactory'sbiggest marketuntillastyear,andsheisworriedaboutgeneratingenoughsalestokeepthe100employeeoperationrunning. Africanowaccountsfor70percentofrevenue. "TheAfricamarketisextremelyimportanttous,"Shaosaid."WhenordersforEuropedropped,wehadtolookforwaysto pushdownpricesandshipitemstoAfrica." "WearedoingallwecantoboostordersfromSouthAfrica." She'snottheonlyone.ServicesfirmssuchasAsiaInspection,whichrunssupplychainauditsandqualitychecksonChinese manufacturers,arealsobusycashinginonstrongdemand.ChiefexecutiveSebastienBreteausaidEuropeanbusinesshas declinedbutanewofficeinNigeria,Africa'smostpopulousnation,willhelptakeuptheslack. "Europeisflattodeclining.WeseeAfricagrowingbigtime,"Breteausaid."It'salloverAfrica,butespeciallyinNigeria.We believeinthegrowththere,andtheChineseareveryclosetotheNigerianmarket." "STEMMINGTHETIDE" Africa'sgrowthmeansChineseofficialsareunlikelytostoptheirpeopleheadingtothecontinenttomaketheirfortune. Attheofficiallevel,BeijinganditsforeignenvoysinsistthatChinesenationalsandbusinessesshouldcomplywithdomestic lawsineachAfricancountry. "IfChinesetradersengageinactivitiesthatviolateyourlaws,wewouldnotseektoshieldthem.Wewouldnotprotect

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Chinesecitizens'illegalbehavior,"saidZhongJianhua,China'sSpecialRepresentativeonAfricanAffairs."Wejusthopethe relevantpartiescanhandlethesituationjustly." ButthesmallprivateChinesemerchantsflockingtoAfricafromareassuchasFujian,atraditionalsourceofmigrantlabor,are nothighonBeijing'slistofpriorities. "There'sadisconnectbetweentheofficialChinese,whoarefrequentlyfromBeijing,andthelikesoftheFujianese,"said YoonJungPark,aChinaAfricaresearcheraffiliatedtoAustralia'sMonashUniversity. "Quitefranklytheyareembarrassedbythem,butthere'snothingtheycandotostemthetidewhenthewordgetsoutthat thereareopportunitiesandmoneytobemade." ThatmeanstherearelikelytobemoredemonstrationsliketheoneinNairobilastmonth,when500Kenyantradersblew whistlesandplastictrumpets,wavedplacardsandchanted"Chinesemustgo."ManyKenyantradersresentthethousandsof Chinesewhoarriveontouristvisasandhawkeverythingfrommilktoclothestoelectronics. "TheissueistoexpeltheseChinesefromKenya,theonesthataredisturbingourcustomers.Theyareinvolvedwitheverybit ofourtrading,"saidJamesThamo,atextiletraderandhotelownerleadingthedemonstration. InSalima,theChineseshopsarenowstaffedexclusivelybyMalawians.TheChinesebossesturnuponlyonceaweekto restockandcollectthetakings."Sincelastmonth,theChinesehavebeenstayinginLilongwe,"saidRichardBanda,a21 yearoldsalesassistantinFuxingTrading."Whenevertherearerumors,theyimmediatelygobacktoLilongwe.Theyare alwaysfearful." LillyLin,ayoungFujianesewhoopenedaclothingstoreinNkhotaKotatwoyearsago,saidshehopestheChinese embassywillprotecther.HerparentsemigratedtoAfricalastyeartohelpherinherbusiness.Shespeaksasmatteringof English,herparentsnone. "I'mreallynotsurewhereinMalawiweare.Iknowalmostnothingaboutthiscountry,"shesaid."Butwe'veinvestedsomuch here.Weownacar.Wereallydon'twanttoleave." (EditedbySimonRobinsonandSaraLedwith) ThomsonReuters2011.Allrightsreserved.Usersmaydownloadandprintextractsofcontentfromthiswebsitefortheir ownpersonalandnoncommercialuseonly.RepublicationorredistributionofThomsonReuterscontent,includingby framingorsimilarmeans,isexpresslyprohibitedwithoutthepriorwrittenconsentofThomsonReuters.ThomsonReuters anditslogoareregisteredtrademarksortrademarksoftheThomsonReutersgroupofcompaniesaroundtheworld. ThomsonReutersjournalistsaresubjecttoanEditorialHandbookwhichrequiresfairpresentationanddisclosureofrelevant interests. Thiscopyisforyourpersonal,noncommercialuseonly.Toorderpresentationreadycopiesfordistributiontocolleagues, clientsorcustomers,usetheReprintstoolatthetopofanyarticleorvisit:www.reutersreprints.com.

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