Africa to gear up for more meaningful engagement with China


The partnership with China should aim to boost Africa’s overall capacity, competitiveness and trade in a way that supports African development. African nations must use the Forum on China-Africa Cooperation to complement the continent’s regional institutions and policy agenda.

This is according to a report by Standard Bank Group economists Jeremy Stevens and Simon Freemantle ahead of the fifth Forum on China-Africa Cooperation (FOCAC) in Beijing, China, that starts on 19 July 2012.

Jeremy Stevens, Standard Bank Group’s Beijing-based economist, says that the summit comes at a time when China is distracted by domestic economic challenges and political matters. Meanwhile Africa is now even more reliant on China, in particular Chinese demand for African commodity exports, but even sentiment towards emerging markets.

“The domestic environment in China is very different from any time previously – the economic growth rate has gone down whereas its volatility has gone up, the levers of growth have changed, the risk of a hard landing has increased, and the policy scope for Beijing to support the economy is more limited,” says Mr Stevens.

“Worryingly, the instability coming from mature economies has made matters worse.

“A changed China demands different Africa. China is looking at Africa in a new way, and is preparing to demand more meaningful engagement from Africa. Africa must respond with a multilateral agenda.”

China has increased its market access by widening the range of products exempt from tariffs entering the Mainland, but Africa needs to look at how partnership with China can further link its economies to global supply chains.

Stevens argues that African leadership needs to take a practical approach focusing on carefully chosen subsectors, which can leverage the global value chain.

Given that China has been successful in delivering its commitments made at FOCAC, he adds that African delegates should alter the benchmarks for success, elevating job creation and economic diversification. Indeed, rising labour costs and currency appreciation in China alone will not push manufacturing jobs to Africa.

Mr Stevens says that special economic zones in Algeria, Egypt, Ethiopia, Mauritius, Nigeria, and Zambia, have been successful gateways for Chinese entrepreneurs and products. The zones should act as the central point for African SME development, and linking these nodes to the rest of their respective regions should be priorities.

“Africa is deeply relevant to China’s next phase of development, and its coping strategy during the tough global economic and financial climate. Africa economic trajectory is relatively stable, and the structural drivers of economic expansion are well entrenched. Importantly, the continent is open to Chinese investment, thereby supporting the “going out” of Chinese state-owned enterprises.

“The continent is a fertile soil for renminbi internationalisation, with CNY36bn in trade done in renminbi already during 2011. Chinese and African interests also converge in sustainable energy solutions. And Africa should do itself a favour to refute the “land grab” ideology and partner with China in food security,” says Mr Stevens.

“FOCAC is the multilateral institutional apparatus framing China-Africa engagements. FOCAC matters as it propels Sino-Africa collaboration in a testing time. Ties have continued to mature, develop and all things considered, flourish since 2009. FOCAC has helped give China-Africa ties continuity, kept them relevant and anchored them in trying such trying times. This week’s meeting in Beijing must continue that momentum.”



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