Chinese Premier to Sign Trade Agreements in Oil Supplier Angola

Chinese Premier Li Keqiang arrived for a two-day visit to Angola, China’s second-largest oil supplier, where he’s expected to approve funding agreements and hold talks with President Jose Eduardo Dos Santos.

It’s the first trip to the southwest African country by a Chinese premier in eight years and deals to finance hydropower and agriculture will be signed, state-run China Daily.com reported today. Several government lenders are considering investing amounts in the billions of dollars in the country, according to an administrator at China Railway Airport Construction Group Co. in Luanda, Angola’s capital, who declined to be identified in line with company policy.

Angola is Africa’s second-biggest crude producer, pumping about 1.54 million barrels a day last month, and sells about half its output China. The Asian nation was among the first to finance Angola’s rebuilding after a 27-year civil war ended in 2002, offering oil-backed loans to fund construction projects as European and other donors imposed conditions such as improving democracy and transparency.

“The trouble for China is that its oil-for-infrastructure model is not sustainable long-term in Angola,” Alex Vines, head of the Africa Program at Chatham House in London, said in a May 6 report. “If Beijing is to continue to lock in oil supplies, a new type of partnership not reliant on Chinese construction contractors will need to be established.”

Angola’s crude shipments to China rose 9.9 percent to 10.7 million metric tons in the first quarter, second only to Saudi Arabia, Vines said. There are more than 258,000 Chinese working in Angola and Li will meet with company leaders as concerns mount about the host country’s unemployment, estimated at about 25 percent by the African Development Bank.

Housing Project

Li is expected to tour Kilamba, one of several residential complexes built by Chinese companies such as Beijing-based Citic Construction Co. to accommodate tens of thousands of people around the capital, which has a population of about 6 million. Kilamba’s 900-hectare first phase cost $3.54 billion to build 115 apartment blocks. Li is scheduled to meet his Angolan counterpart tomorrow afternoon.

China-Angola trade reached $36 billion last year, according to China Daily.com. Accumulated investment by China in Angola has exceeded $8 billion, it said. China Railway Airport Construction is building a new international airport in Luanda and spent about $1.8 billion refurbishing the Benguela Railway linking the Democratic Republic of Congo to the Atlantic Ocean.

Africa Trip

Li and his 129-member delegation are on the third stop of a four-nation African tour following Ethiopia and Nigeria before heading to Kenya. Angola, a communist country from its 1975 independence from Portugal until after the Berlin Wall fell, has been run by dos Santos since 1979. He’s the longest-serving ruler in Africa after Equatorial Guinea President Teodoro Obiang Nguema Mbasogo.

“This visit emphasizes that China continues to invest in Africa, is a long-term predictable partner and offers ‘win-win’ partnerships for African governments without conditionality,” Vines said. “The visit to Luanda from 8 May is the most important on this trip for Premier Li.”

To contact the reporters on this story: Colin McClelland in Luanda at cmcclelland1@bloomberg.net; Manuel Soque in Luanda at msoque@bloomberg.net

To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net Paul Richardson, Ben Holland

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