China has built 10,000 km of railways, hundreds of facilities in Africa

Foreign Minister Wang Yi reiterated China’s support for Africa’s “economic autonomy and sustainable development” while on an official visit to Addis Ababa, the capital city of Eastern African country Ethiopia.

Chinese people treated more than 200 million local patients, helped Africa build more than 10,000 km of highways, 6,000 km of railways and hundreds of airports, ports and power stations over the last decades, Wang stressed.

Rejecting “rumors” according to which the growing economic ties between China and Africa resulted in a growing debt burden for the latter, the Chinese official implied that other countries might be attempting in discrediting China’s support that he depicted as “a model not only for South-South cooperation but also for international cooperation with Africa”.

According to official statistics, China became Africa’s largest trade partner in 2009, rising from less than $20 billion in 2002 to a staggering $215 billion in 2014.

Latest available annual figures showed a relative slowdown in bilateral trade with $170 billion in 2017, however up 14.1 percent year-on-year. China’s exports to Africa reached US$94.74 billion, up 2.7%; China’s imports from Africa reached $75.26 billion, up 32.8%; the trade surplus was $19.48 billion, down 45.2% year-on-year.

Why should investors read James Mattis’ resignation letter?

Investors have been monitoring China’s economy for a long time and any good or bad figure from Hong Kong and Shenzhen does impact global markets. The resignation of US Defense Secretary James “Mad Dog” Mattis after two years with the Trump administration comes as additional evidence of how the United States might deal with the 21th century’s strategic environment.

Beyond the consequences of a US military withdrawal from the on-the-ground combat against the Islamic State (ISIS) in the Syria-Iraq area from stability and energy viewpoints, this is more about Russia and chiefly about China that Mattis’ resignation bears significant relevance.

“I believe we must be resolute and unambiguous in our approach to those countries whose strategic interests are increasingly in tension with ours,” wrote General Mattis in his resignation letter. “It is clear that China and Russia, for example, want to shape a world consistent with their authoritarian model”, stressed Mattis.

As a result, investors should understand that from a global strategic perspective, a number of US officials do envisage growing tensions – be it a cold or a hot warbetween the United States-NATO and a China-Russia axis. Although any military confrontation seems unlikely today, the loosening of nuclear weapons and nonproliferation treaties plus trade disputes have grown while China emerged as the world’s second largest economy and while the United States searched to meet the long-term challenge of its increasingly contested leadership.

Clearly, James Mattis writes that the relationship between the West and Asia is likely already engaged on a rocky road already, and any savvy investor should take this into account on a worldwide scale.


Likely long-term buying opportunities in the Chinese market

On June 12, 2015, the Shanghai Composite Index (SSE) jumped to 5,166 points while its US counterpart Dow Jones Industrial Average (DJIA) rose to 17,898 points at an even more moderate pace.

Three-and-a-half years ago, therefore, it was on the Chinese side that investors were looking for strong growth potential, at least in the value of their quoted shares as the recovery of the US economy backed global growth.

Today, the cards have clearly changed hands since the situation is more or less reversed with the SSE which has fallen to 2,598 points, down 49.71 percent since its top of June 2015, and with the DJIA which despite entering the correction zone in October 2018, however, remains at a historically high level at 24,688 points, up 37.93 percent in the same period.

Against the backdrop, the gradual decline in Chinese economic growth and President Xi Jinping’s ambition to turn his country from the workshop of the world into a consumer economy have contributed to this sharp stock market depreciation of Chinese assets even though the peak of 2015 appears a posteriori as a typical buyer excess.

Considering the long-term potential of China and taking into account the ups and downs of its trade negotiations with the United States, it seems relevant to look now for possible good buying opportunities in the Chinese market, especially in the consumer and energy sectors.