Beijing to boost spending in Africa fund

China is to pump a further $2bn into its African investment fund earlier than planned to snap up opportunities left by the hasty retreat of western investors from the continent.

Since its launch in late 2006, the China-African Development Fund has invested $400m (€309m, £286m) and expects to have spent most of its initial capital of $1bn by the end of the year, as much as two years ahead of schedule, said Chi Jianxin, the fund's chief executive.

Observers of China's flourishing relationship with Africa have noted that Beijing has been known to deliver less than its prodigious promises. Indeed, anecdotal evidence suggests that recent Chinese arrivals on the continent, particularly miners, have been heading home in their droves as commodity prices plunge.

However, speaking ahead of the opening of the fund's first representative office in Johannesburg, the commercial capital of South Africa, the continent's biggest economy, Mr Chi said: “We are moving faster. Because other [investors from] markets are not coming, [African companies] need more money from us.”

The fund was created following the November 2006 Africa-China summit in Beijing, a landmark in China's burgeoning political and economic relationship with a continent that is replete with the minerals it has needed to fuel its growth.

It receives all its capital from the China Development Bank, which had 2,261bn renmimbi ($331bn, €256bn, £236bn) in assets at the end of 2007 and which is directly controlled by the State Council, China's highest decision-making body.

A prospectus lists initial investments in agriculture ventures in Ethiopia, Malawi and Mozambique; a share of a $450m power station in Ghana; and Egyptian, Nigerian and Mauritian industrial zones, among other projects. Mr Chi added that the fund had also invested in Zimbabwe. The fund says the $400m it has spent so far ”will drive Chinese enterprises to make investments of more than $2bn”.

From next year it would embark on a second, $2bn phase of investments, accelerating towards its goal of $5bn, Mr Chi said.

Beijing's critics have attacked its willingness to invest heavily in countries with repressive regimes, citing close ties with Sudan and Zimbabwe. Its supporters accuse its western critics of hypocrisy, pointing to cosy relations between Washington and countries such as Equatorial Guinea, an oil-producer with a poor human rights record.