Expanding Trade and Investment Between China and Mozambique

Mozambique, ravaged by over a decade of civil war, has recovered to become one of Africa's most consistently growing economies. China has taken note. In recent years trade between the two nations has expanded rapidly, as has China's foreign direct investment into Mozambique.

Singing praise for China-Mozambique relations

The musician Bob Dylan once wrote: "I like to spend some time in Mozambique…It is very nice to stay a week or two, and fall in love just me and you." Not long after the song's release in 1976, Mozambique entered a long civil war in which there was little love and less to sing about. Since peace was established in the early 1990s, however, the country has recovered and is now revered as an African success story, with GDP growth averaging 7.3 percent over the past 10 years. Although Bob Dylan's concerts were recently canceled in China, it seems that his admiration for Mozambique is shared by Chinese traders and investors. 

Trade has been growing exponentially between the two countries. As little as $13 million changed hands in 1998, yet this number would increase more than 30 times to $488 million in 2008. Despite worldwide setbacks in trade due to the financial crisis, Mozambique and China nonetheless exchanged $344 million through the first nine months of last year. The most commonly swapped items include construction materials and manufactured goods from China for Mozambique's timber, minerals and agricultural products. In less than a decade China has risen to become its African counterpart's third-largest trading partner, behind only South Africa and Portugal.

Besides goods, flowing into the borders of Mozambique has been Chinese foreign direct investment (FDI). Supplying $76.8 million in 2008, China ranks second for FDI flows into the African country. This is sure to increase in the future, as around half of total Chinese investment into Mozambique has occurred within the past seven years. The result has been a noticeable increase in Mozambique's agricultural capacity, particularly in rice production, and new jobs for an estimated 11,000 people.   

Much of this increase in FDI flows from China can be attributed to an investment-oriented promotional organization called CPIDCC (Center for Promotion of China Investment Development and Trade) established by the then Chinese Ministry of Foreign Trade and Economic Cooperation in 1999. Located directly across from Mozambique's Ministry of Planning and Development in the nation's capital, Maputo, CPIDCC has assisted numerous Chinese companies entering Mozambique, including the 40 which registered only last year.  

Although Dylan thought it "nice to stay a week or two," with these developments, it seems that Chinese business has a longer time-frame in mind for Mozambique.

The ChinAfrica Econometer is produced by THE BEIJING AXIS, a cross-border business bridge to/from China in three principal areas: Strategy, Sourcing & Investment.

For more information, please contact: Barry van Wyk

barryvanwyk@thebeijingaxis.com

www.thebeijingaxis.com