The government of China and state-owned banks are planning to extend a credit line of up to $1 trillion to African countries between next year and 2025 as the Asian dragon seek to extend it influence on the continent, its main source of its raw material and market.

Zhao Changhui, the chief country risk analyst at Export-Import Bank of China (Eximbank), said the bank will account for 70 to 80 per cent of that $1 trillion, which will include direct investments, soft loans and commercial loans, South China Morning Post reported.

“We have plenty of money to spend,” he said. “We have the budget for major projects. China has US$3.5 trillion of reserves, which cannot just buy US treasuries. We need to use part of them in overseas investments.

“Africa for the next 20 years will be the single-most important business destination for many Chinese mega corporations.”

Changhui was speaking at the recent Africa Investment Summit in Hong Kong.

Last year, Eximbank, a leading lender to overseas Chinese projects, provided tens of billions of dollars to Africa. The US$1 trillion of future financing was a big increase from China’s previous financing of Africa, Zhao said without giving exact numbers.

Zhao said Eximbank was looking to participate in infrastructure projects in Africa, including transnational highways, railways and airports. He estimated it would cost US$500 billion to build a continental rail network.

Eximbank was in negotiations with the government of the Democratic Republic of Congo to finance air corridors in the country, which might possibly include leasing or purchase of aircraft. Congo’s road network is inadequate, so air travel was needed as an alternative transport mode, he said.

“Africa is infrastructure-light right now. There is intense need for electrification,” said Jeff Gable, the managing principal of Africa non-equity research at Barclays.

Last month, state-owned China Machinery Engineering Corp signed a US$127 million contract to build and expand power grids in six cities in Equatorial Guinea, and a US$199 million contract to build a highway power supply system in the nation, the Hong Kong-listed firm announced.

Other projects by China in Africa include CMEC contract to build two power plants in Nigeria for US$621 million.