Analysis & Opinions - Business Daily

China Should Import Africa's Finished Goods

| September 27, 2007

In the largest deal with an African country, China has signed a US$5 billion loan to the Democratic Republic of Congo (DRC) to develop mines and build infrastructure.

While the loan will support key social programmes, it reinforces the perception that China’s main interest in Africa is natural resource extraction. The most viable way for China to change this perception is to start importing manufactured good from Africa as well.

The loan represents a quarter of the US$20 billion that China has offered to fund trade and investment programmes in Africa. It will be used to build roads, railways, hospitals, more  health centres and two universities and housing projects.

In return, China will secure rights to the country’s natural resources such as cobalt, copper and timber. China’s imports from Africa include manganese from South Africa, uranium from Niger and oil from Sudan and Angola.  

These imports have helped to revive many collapsed mines. But Africa has higher expectations. Its leaders are looking into ways to add value to their natural resources and are reflecting in their growing emphasis on higher technical training.

In Ghana, for example, public discussions are underway to allocate some 60 per cent of the education budget to science education and the rest to the humanities.

China’s own annual admission of 2,000 African students into its universities reflects the continent’s growing demand for technical training. The promise to expand the intake to 4,000 a year by 2009 has been welcome.

But African countries also look to China as a role model in the field of industrial development.

Its rapid economic transformation is largely a result of strong development leadership, administrative discipline, broad technical education (mostly engineering), access to foreign technology and capital and investment in infrastructure.
China has emerged as a major exporter of manufactured goods. A few African countries have been successful in updgrading their industrial competence. Mauritius stands out as an example. The country ranks second in per capital GDP in Africa after the oil-rich Equatorial Guinea.

It has sustained a growth rate of about six percent largely because of its emphasis on upgrading performance in the industrial, service and tourist sectors. But China’s exports now threaten to erode local African industries and undermine the limited industrial gains that the continent has made.

The worst that China can do is to continue Africa’s mineral and plantation economies. China needs to complement its raw material imports with serious efforts that help African countries become exporters of finished goods to the Chinese market.

Failure to do so will reinforce the perception that China’s involvement in Africa will undercut the continent’s efforts to increase its participation in the global economy.

There is a strategic starting point for China. The country has set up the US$5 billion China-Africa Development Fund that aims to eliminate tariffs on over 440 African export items and build several economic and trade cooperation zones across the continent.

This funding should be used to help Africa upgrade its capacity to export manufactured goods to the Chinese market.

But none of it will happen unless African leaders insist on it as a priority. They can learn from China on how to do this. Any deals that ignore this aspiration by Africans can only sow the seeds of resentment toward globalisation in general and China in particular.

Prof Juma teaches at the Harvard University’s Kennedy School of Government.

For more information on this publication: Please contact the Belfer Communications Office
For Academic Citation: Juma, Calestous.“China Should Import Africa's Finished Goods.” Business Daily, September 27, 2007.