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Chinese rail construction giant pens $5.5bn in African deals.

Posted on Apr 29, 2015

China Rail The construction subsidiary of Chinese railway giant CRCC, CRCC China-Africa Construction, has penned two massive deals in Africa worth a combined $5.5 billion, underlining once again the role of Chinese companies on the global market. As reported by China’s Xinhua news agency, plans are signed for a $3.51 billion contract to build an intercity railway in Nigeria and a $1.93 billion construction contract for a residential project in Zimbabwe. Meng Fengchao, the chairman of CRCC, said the deals are a further sign of the company "going global". Or as the Financial Times labels it another example of the “New Silk Road” strategy to build infrastructure around the developing world, particulary in Africa.

In what has been a busy year for the Chinese rail industry and in particular movements to expand overseas, the state-owned CSR Corporation and China CNR, merged last month. Already the world’s largest manufacturers of rolling stock with combined annual revenues of over $30bn, the announcement will provide further competition against Japanese, European and North American rivals.

The newly merged company known as CRRC Corporation toom  over all assets, liabilities, contracts and staff of the two companies. It’s a reunion of sorts with the two companies divided up from the same state organisation over a decade ago in an attempt by Beijing to promote domestic competition and innovation. Though both have seen overseas growth, with CNR for example in 2014 securing China’s first US rolling stock contract, with the agreement to build 280+ passenger cars for the Boston network, there had also been domestic criticism for undercutting each other and some well publicised failures, most recently in Mexico.

China’s investment in Africa have proved controversial in recent years with questions over the transparency of the deals and the openness of the tender process plus tensions from immigrant Chinese labour. Though with the China Development Bank, having according to the China Daily granted more loans to Africa than the World Bank, the African Development Bank and the Asian Development Bank of over the past six years this is unlikely to change anytime soon.

See also: “We are now passing under Mount Everest” - China considers mega rail tunnel. and Bombardier forms joint venture to tackle Chinese signalling market.

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Topics: projects

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