Opinion: Strong, fair trade with China critical to Africa’s development

Chinese President Xi Jinping (front C), South African President Cyril Ramaphosa (front 3-L), Egyptian President Abdel Fattah al-Sisi (front L), KenyaÕs President Uhuru Kenyatta (2nd row L), TogoÕs President Faure GnassingbŽ (2nd row C), Malawi's President Arthur Peter Mutharika (2nd row R), Sierra Leone President Julius Maada Bio (last row L), Liberian President George Weah (last row C) and other African leaders clap during a group photo session during the Forum on China-Africa Cooperation (FOCAC) 2018 Beijing Summit in Beijing, China September 3, 2018. How Hwee Young/POOL Via REUTERS
Chinese President Xi Jinping and African leaders during a group photo session during the Forum on China-Africa Cooperation (FOCAC) 2018 Beijing Summit in Beijing, China September 3, 2018. How Hwee Young/POOL Via REUTERS

by Dr. David Monyae

The Africa-China relationship can best be described as comprehensive and strategic at this stage. This is primarily due to multiple agreements reached between the two parties at the Forum on China-Africa Cooperation, as well as other bilateral deals reached between China and individual African nations. As the Chinese economy grows, African countries collectively benefit from trading with China. Although the global financial crisis reversed some of the huge gains in the trade relationship between Africa and China, the people-to-people relationship continues to grow even stronger. It is a relationship that has matured remarkably. Through FOCAC, the two regions are able to handle the challenges that arise, including the propaganda leveled against China’s favourable loans to Africa. These loans are currently described by western countries as ‘debt-trap’ for Africans.

Of course, no relationship is perfect and while African nations benefit from Chinese investment especially in infrastructure, there has been little reciprocal value in China as a ready market for goods. This must change in order to ensure further cooperation between China and the nations of Africa.

It is within this context therefore that one expects Africa and China to be able to overcome difficulties caused by the senseless trade war waged by the United States.  Trade wars have never resolved any problem in world history.  This current tiff could have a devastating impact not just on Beijing and Washington but on Africa as well.  The African continent needs a stable global order to develop. However, if Africans concentrate on the positive opportunities brought about the trade war, it will certainly be the greatest winner. Africa could handsomely benefit by picking up some the agricultural export business left behind by the U.S.

But Africa has numerous challenges that hinder its ability to massively benefit from the huge Chinese market. Firstly, most African countries have a limited scope of tradable goods. When it comes to value-added goods the continent has been unable to muster enough knowledge and skills to improve trade with China.  Africa exports primary commodities (raw materials, food, ) to China, but not much else. The global prices for these products are determined by western countries. China, on the other hand, has been assisting African countries in improving the much-needed infrastructure to enable smooth movement of people and goods between and among African countries. This is also improving the process of regional integration in line with the African Union’s Agenda 2063. At the 2018 FOCAC held in Beijing, African leaders did raise the question of trade imbalance between Africa and China. This matter must be addressed urgently to ensure a truly win-win situation as defined by the nature and character of the relation between the two parties.

As China’s economy gradually gains momentum, clear signals are visible that labour cost is
increasingly getting high. There is overcapacity in so many sectors of the Chinese economy. This requires Chinese companies to search for alternative countries and regions in which to invest. Africa is perceived as a natural beneficiary of this transition taking place in China. The middle class in China is the fastest-growing middle class in the world. With this growth comes an increasing demand for goods. It is within this context that China has become a major export market for the world. President Xi Jinping’s One Belt One Road Initiative requires massive goods to succeed. Africa has a golden opportunity to get the premier position as a supplier for China’s demand.

With the launch of the China International Import Expo (CIIE) it is obvious China wants to position itself as world commerce leader with Shanghai as the center. In my view, there is absolutely no doubt that Shanghai will become a global shopping destination. China’s rapid development of high tech and use of artificial intelligence to improve its supply chains has positioned China to be a leader in the much anticipated 4th Industrial Revolution. The kind of new technologies in all sectors China has been able to develop is breathtaking. Shanghai will be therefore going to be beyond a global shopping center. It will be also a hub for the 4th Industrial Revolution technologies. China will become a knowledge center attracting the coalesce of different civilizations to share prosperity in the new era.

The sheer USD 10 trillion amount of money China has declared to be available in buying
goods from all over the world in the next five years opens endless opportunities for Africa.
However, Africa must develop a coherent China strategy if it is to become the vital trading China needs. This relationship must be a mutually beneficial one…one that develops opportunities for both regions, reduces the trade imbalances and brings a win-win situation for both China and Africa.

Dr. David Monyae is an international and foreign policy expert and serves as Co-Director of the Confucius Institute at the University of Johannesburg.

The article reflects the author’s opinion, and not necessarily the views of CGTN.

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