In 2004, Angola had been under pressure from Western investors and financial institutions over economic governance and transparency in joint-venture projects. Chinese investment seemed to offer more immediate and tangible benefits without the transparency demanded by the West. Skeptics, however, argue that because Chinese investment comes with fewer strings attached, its benefit to Angola in the long-run may be harder to gauge.

The fruits of Chinese investment are clearly visible on the ground. It's four o'clock on a sweltering afternoon and a man wearing a conical straw hat feverishly directs workers pouring gravel along a new railway line. The railway line is one of the projects, which include hospitals and public housing, financed by a $2 billion credit to Angola from China, to be repaid to China in Angolan crude oil.

The railway project is an example of how multiple levels of commercial ties have helped China become a key economic player in Angola, buying Angolan crude oil and providing infrastructure development and goods in return.

China's initial $2 billion-worth of credit, followed by a further $2 billion loan this year, doesn't only aim to secure long-term oil supplies, it also opens up a new market for Chinese companies; under the terms of the oil-backed loan, 70% of the money spent on infrastructure projects goes to Chinese contractors and 30% to Angolan firms.

China International Fund Ltd. is behind the rehabilitation of the Malange railway line, which stopped running amid 27 years of civil war that ended in 2002. An army of Guangxi Liugong Machinery Co. Ltd. excavators and Dongfeng Motor Corp. (0489.HK) cement trucks can be seen at the project's main working camp at Viana, 50 kilometers east of the capital, Luanda. Improved infrastructure also gives China easier access to resources. The route of the railway is set to run 500 kilometers from Luanda to the city of Malange, the door to the diamond-rich east of the country. To complete the circle, China International Fund in early 2004 penned a cooperation agreement with Angola's state-controlled diamond marketing concern, Sodiam.

Another Chinese financed railway reconstruction in Angola, the 1,300-kilometer Benguela line, is set to open the shortest route for copper exports from the Congo-Zambian copper belt. China is now the world's largest copper consumer and has mining concessions in the area.

The loan that is now financing the railway underscores an increased convergence of Chinese and Angolan interests that started to become apparent two years ago. At the time, Angola was irritated by a decision by U.K. oil major BP PLC (BP) to publish the bonus payments paid to the government for the right to extract oil in the country. Apart from Norway's Statoil ASA (STO), which also disclosed the bonuses it paid, BP was the only other major oil company to do so, to comply with U.K. disclosure regulations.

At that time, Angola was also resisting pressure from the International Monetary Fund which wanted to tie a postwar, international donors' conference to tighter economic governance. A spokeswoman for the fund confirmed that the "IMF did discuss different options with the Angolan authorities in 2004, including a staff-monitored program." She declined to comment further.

In the face of commercial and economic pressure from the West, China offered Angola an alternative, comprehensive investment model that promised to bring the significant inward investment the country needs, without the strings.

Late 2004, the Angolan government approved the sale of Royal Dutch Shell PLC's (RDSB.LN) 50% in an oil block operated by BP to Sonangol, which sold half of the stake to state-owned China National Petrochemical Corp., or Sinopec. The same year, China's export credit agency, Exim Bank, announced an oil-backed loan to finance the Malange railway and other projects.

The two events have been the launch pad for tighter Sino-Angolan ties and, beyond, for greater Chinese investment in Africa as a whole.

In May, Angola leapfrogged Saudi Arabia for the first time as the largest supplier of crude oil to China, a position it has kept since with 13.36 million metric tons of oil shipped from the African nation during the first six months of this year.

And Angola is sending a higher proportion of its oil exports to China, instead of the U.S., formerly its largest export market. In the first six months of 2006, the African country shipped 84.6 million barrels of oil to the U.S., the equivalent of 9.51 million metric tons.

Chinese manufacturers of consumer products are also benefiting from the closer ties. In the provincial capital of Cabinda City, most household items are made in China: sewing machines carry the Feiyue Group Co. Ltd logo and water filters are made by Qigang Electrical Appliance Co. Ltd.

With high commodities prices bringing an unexpected windfall to governments across the African continent, many hope to use the additional revenue to invest in much-needed development projects.

According to China's Ministry of Commerce, China-Africa trade reached $39.7 billion in 2005 with an annual growth rate of about 30%, 12 percentage points higher than the national foreign trade growth in the same period.

Though Angola is the country in which China so far has gained the largest volume of trade in terms of investment and crude oil supply, China is also fast expanding ties with Nigeria, the top African crude oil producer. There, it has bought into oil blocks and committed to investment in a railway, including a recent $8 billion deal, and power stations, partly paid for under its oil-backed loan model.

But the picture isn't all rosy. China has been criticized for dealing with Africa regimes engaged in massive repression against their own citizens, such as Sudan and Zimbabwe.

Skeptics also question whether China's oil-backed loan model will deliver sustainable development for Angola, and for Africa as a whole. The Chinese "are bringing a combination of financial and technical power. But with less demands for transparency than the (rest of the) international community," says Pierre-Francois Pirlot, the Angola representative of the United Nations Development Program.

In Angola there are examples of how Chinese development may have in some cases missed its mark. About five kilometers from Cabinda City, set up like a movie set amid the baobab trees and savannah, are model suburban houses built by Nanjing-based China Jiangsu International Group.

Pictures of childless Chinese couples walking in front of the same houses depict the domestic bliss accessible to the future Angolan house owners. But 20 kilometers from there, the village of Futila has no running water and the nurse at the local dispensary says she lacks basics such as aspirin.

It's unclear if the Cabinda houses will ever be completed. Wu Hengyun, the Jiangsu project manager, says all works have been suspended because the company is waiting for $5 million in payments from the Angolan provincial government. The Angolan ministry of public works, the local branch of which is overseeing the project, couldn't be reached for comment.

-By Benoit Faucon, Dow Jones Newswires; +44-20-7842-9266;