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VOL.4 September 2012
Trade Off
China-Africa trade cooperation must be sustainable
by Alphonce Shiundu

South Africa took over the continental seat at the helm of the trade and investment partnership between China and Africa, with a call to change the way business has been done over the past decade.

In the partnership, Africa's main role has been to supply the giant Chinese economy with raw materials, a market for its products and a place for Chinese entrepreneurs to make money. China, on the other hand, has opened its credit lines to African countries, doling out concessional loans. It has also pumped in volumes of funds in investment, trained thousands of people and written-off billions of dollars worth of debt.

But to South Africa's President Jacob Zuma, such a mode of business, even with the "mutual respect" and "win-win" elements that have been touted, was difficult to sustain.

"This trade pattern is unsustainable in the long term," said Zuma, speaking in Beijing at the Fifth Ministerial Conference on the Forum on China-Africa Cooperation (FOCAC) in July.

"Africa's past economic experience with Europe dictates a need to be cautious when entering into partnerships with other economies. We are particularly pleased that in our relationship with China we are equals and that agreements entered into are for mutual gain," said Zuma.

Though these strong words might have been overshadowed by the handsome $20 billion credit line that China is ready to dish out to Africa over the next three years, the continent's worry in the "relationship" had been voiced.

The impression one gets by looking at the infrastructure developments on the continent points out that China might be doing it so that the country is able to access raw materials for its industries in the power cities of Tianjin, Chongqing, Beijing and Shanghai, among others.

However, Li Jinzao, Co-Chairman of the Chinese Follow-up Committee of FOCAC and Vice Minister of Commerce, doesn't think so.

To him, "rapid growth of investment cooperation reflects complementarity between China and Africa in resources, markets and industrial structure. It shows that cooperation brings mutual benefits and win-win results to economic growth."

Chinese investment goes to all African countries. Investments of over 2,000 Chinese companies flow into 50 African countries ranging from resource-rich countries like Angola to resource-poor ones like Mali, Li noted in a brief seen by ChinAfrica.

Experts at the China Institute of International Studies also reckoned that China has its priorities, while the African countries have theirs; so if China and the individual countries agree to work out a compromise, where the two sides benefit, where's the problem?

Economists say that the biggest "stumbling block" to the development of the continent was the inadequate infrastructure, which in the end makes production so expensive. Once that is sorted out and markets are consolidated, then the locals can do more business; and so can the Chinese, whose goods will be able to reach a wider market.

The institute's Vice President Liu Youfa noted, "China does have its national objectives, but the primary thing [in this cooperation] is to respond to the needs of the individual countries on the continent."

While African countries should be smiling now that they're able to access the Chinese market, the smiles are not beaming because China is far more technologically superior, and inundated with well-established brands from the West. That, in itself, will ensure that China comes out on top in terms of the balance of trade, unless the African entrepreneurs focus on other niche markets outside the traditional "arts and craft."

"Arts and crafts are very popular in this country, but people do not live on arts and crafts. Those businessmen who want to access the Chinese market should try to manufacture more goods that cater for the consumption aspirations of the Chinese people," Liu told a team of African journalists at the institute in Beijing.

With China's massive consumer base African FOCAC members need to look at this market for exports of products like tea, coffee, horticulture and tourism. But what must not be forgotten is that China has its own interests in Africa and it is incumbent upon the continent to find ways to exploit these interests for the good of individual member countries.

The 19th Session of the African Union Summit discussed the progress of the AU/NEPAD (New Partnership for African Development) Presidential Infrastructure Championing Initiative (PICI), which South Africa chairs, and the North-South Road and Rail Development Corridor. The verdict was cross-border infrastructure was crucial because it has a high impact on development.

"I believe that China can add impetus to this program as well as the Program for Infrastructure Development in Africa (PIDA), where we have collectively agreed on the priority projects that need urgent attention," said Zuma.

That means China should be ready with funding, expertise and equipment. In return, minerals, oil and a market for exports, plus huge business opportunities are waiting in Africa.

When the leaders of China and Africa meet again in 2015 - which coincidentally is the time when the millennium development goals expire - it is hoped that a sustainable trade pattern will be functioning optimally.

(Reporting from Kenya)

 

 

 

 

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