Africa-China trade: building a new, strategic relationship

• The strategic interests of China and Africa are inextricably linked. Africa must prove it is a reliable, predictable trade partner and attractive destination for investment. China must listen to what Africa wants
• China and Africa’s relationship is evolving into to a true partnership to structure mutually beneficial economic relations

Dar es Salaam, Tanzania, May 2010 – The 20th World Economic Forum on Africa is in its second day in Dar es Salaam. Twelve African heads of state/government are taking part along with over 1,000 participants from 85 countries. Rethinking Africa’s Growth Strategy is the theme of the meeting.
Increasingly, the strategic interests of China and Africa are inextricably linked. Africa must prove it is a reliable predictable trade partner and attractive destination for investment, while China must listen to what Africa wants. “The challenge is to define clearly with China what we want and the directions of investment. Africa now needs to set the agenda much more energetically,” said Rob Davies, Minister of Trade and Industry of South Africa. “China wants raw materials, but for Africa to benefit, we must grow beyond suppliers of dirt out of the ground that goes somewhere else to be processed.”
Research shows that Africa’s growth is tracking that of China’s. Chinese demand – either real or perceived – and relatively buoyant commodity prices are underpinning growth in sub-Saharan Africa. Part of China’s growth will depend on Africa’s ability to supply commodities. As a result, China and Africa’s relationship is changing from one where contracts were drafted and signed by African leaders to a true partnership, reflecting a strategic relationship in which Africa is increasingly engaged.
“We have to understand China’s priorities and use them to our advantage. Structuring mutually beneficial economic relations is what it is about. It is in the interest of both parties to move forward,” added Davies.
As Africa seeks to position its economies within today’s changing competitive landscape, there is a need for increased trilateral cooperation, integrating the interests of China and the Western world in Africa. “There is a possibility for an alignment of these new emerging interests,” said Liu Guijin, Special Representative, African Affairs, People s Republic of China. “We have different priorities in policy design and different approaches in engaging the African continent. But we have to ensure that cooperation would be a win-win trilateral process that will bring the advantages of the Chinese way of doing things together with the advantages of Western donors so that all African countries will equally benefit.”
The overriding limiting factor to Africa’s growth is poor infrastructure. “We need new infrastructure to enable businesses and the economy to grow. Africa needs foreign direct investment (FDI) and Africa is an open market,” said Geoffrey White, Chief Executive Officer, Lonrho, United Kingdom. “Africa needs to lay down clearly what it wants out of these deals. I’ve seen a maturing of relationships [between China and Africa] over time. Africa is more selective, for example, by demanding a percentage of local employment.”
Meles Zenawi, Prime Minister of Ethiopia, wants strengthened cooperation with China to help “reverse the de-industrialization” of African economies. “China’s interest to diversify investment is consistent with our interest to re-industralize. We are looking to them to help us build infrastructure, investment in African manufacturing and to develop skills,” he commented.
Lu Qingcheng, Vice-President, China-Africa Development Fund, People s Republic of China, noted that close economic cooperation is “a continued partnership” which is funnelling FDI to Africa. So far, the fund has supported 13 projects worth US$ 800 million. “We are encouraging Chinese institutions to set up a US$ 1 billion fund to support African SMEs if they wish to enter into joint ventures,” he said.
He Wenping, Professor and Director, African Studies, Chinese Academy of Social Sciences (CASS), People s Republic of China; Global Agenda Council on the Future of Africa, pointed to a new chapter in relations between China and Africa that was opened in November 2009 at the China-Africa Cooperation Forum. Chinese Premier Wen Jiabao announced eight new measures to enhance partnerships with 53 African states in agriculture, debt relief, market access expansion, climate change, medical affairs, education, environmental protection and promotion of investment. “These eight new measures are another big step forward and has opened up big opportunities,” she said.
More work needs to be done to counter the image of China as a rising rival. “To strengthen the relationship, there has to be more people to people interaction,” said Hafsat Abiola-Costello, Founder and Chief Executive Officer, China-Africa Bridge, People s Republic of China; Young Global Leader. She pointed to scholarships, student exchanges and business fairs to promote private sector collaboration. “There are many opportunities for a differentiated understanding between China and Africa. This will involve a continual exchange.”

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