China has become Africa’s largest trade partner, and Africa is now China’s major import source. It is also the second-largest overseas construction project contract market and fourth-largest investment destination.
Paul Ntambara caught up with Chen Hao, the Chinese Ministry of Commerce’s West Asian and African Affairs department deputy director in Beijing, China to give an insight into the country’s trade co-operation with Africa, and with Rwanda in particular:
China-Africa trade co-operation has been increasing over the last few years, could you give an insight into this growth?
Business co-operation with Africa is majorly in four fields; trade, engineering/construction, investment and development assistance. The relationship between China and Africa plays a very important role in the economic and social development of each party involved.
According to figures, trade volume between China and Africa stood at $210.2b in 2013; the first time our trade value has exceeded the $200b mark.
Statistics also indicate that China is presently Africa’s biggest trading partner. Africa is also important in China’s trade as supplier of resource products.
Also, Africa is the main market for Chinese companies in engineering/construction, which is one third of the total turnover of Chinese companies globally.
Chinese companies in Africa invested up to $3.5b last year, excluding financial investment by the Chinese government.
Though this investment is not big, it is rising fast. In fact, this was a 20 per cent growth rate year-on-year. The overall investment has now exceeded $25b, with over 2,000 Chinese firms investing on the continent in all fields of business co-operation, including finance, telecoms, energy, processing, manufacturing and agriculture.
There are about 1,000 development projects on the continent, about 50 per cent of which are by the Chinese government, such as the TAZARA railway line in Tanzania (Zambia) and the African Union Conference Centre in Addis Ababa, Ethiopia. There are also projects aimed at improving people’s livelihoods such as houses, hospitals, schools, safe water, as well as agricultural technologies.
However, the fifth Ministerial Conference of Forum for China-Africa Co-operation held in July 2012 in Beijing introduced three business measures to enhance practical co-operation between China and Africa in investment and financing.
Under this arrangement, China will provide $20b loans to Africa to support projects in agriculture, infrastructure, manufacturing and small-and-medium enterprises. The Chinese government will also increase development assistance to Africa to ensure the co-operation benefits the ordinary people.
This kind of assistance will be targeted at projects like establishing agriculture technology demonstration centres, health, capacity building and scholarships for African students. We will also provide vocational training facilities, improve cultural facilities, as well as environmental protection facilities and provision of boreholes for safe drinking water.
We will support Africa’s integration process and help the continent improve capacity to achieve its development goals.
We are also going to support the establishment of transnational and trans-regional infrastructure; help African countries improve customs facilities and inspection to enhance intra- regional trade on the continent.
Where does Rwanda fit in this trade co-operation?
Though the size of our trade co-operation with Rwanda is not big, it is growing to match the country’s fast development. Last year, the trade value hit the $240m (about Rwf164.4b) mark, which was over 50 per cent increase year-on-year. This involves Rwanda’s exports to China and Chinese imports into Rwanda. This expansion is one of the best in our trade co-operation with African countries.
China’s investment in Rwanda is also growing, with $2.6m invested in the economy last year. It could be little, but it signifies big co-operation potential.
Most Chinese products are sub-standard, attracting an outcry from traders and consumers; what is your take on this issue?
The concern about the quality of Chinese products in Africa has been a major concern.
However, one has to look at the issue carefully... Despite the problems Chinese products have, they are helping meet the needs of the ordinary people on the continent and in other parts of the world.
Let us look at mobile phones, for example; in some poor and remote areas of Africa people cannot afford European or American made mobile phones because they are not available or they are expensive; but this is not the case with Chinese phones, which are affordable and they have improved the quality of people’s lives on the continent.
However, I agree that there is a problem of quality of some Chinese products; we have to admit it and face it. Some people make substandard products in China illegally and sell them, not only in Africa, but also on the Chinese market.
This has attracted the attention of the Ministry of Commerce and other ministries and departments in China, which have worked together to put in place measures to crackdown on the vice.
For instance, in 2012 and 2013, we organised special campaigns to crackdown on the export of illegal and substandard products to Africa. The operation involved the Ministry of Commerce, customs administration, the bureau of quality inspection, the Public Security Ministry, as well as local governments.
The campaigns are bearing results. Besides, the government has zero tolerance for such practices. We have in fact instituted severe measures for anyone found producing and selling substandard goods to Africa.
It is important to understand though that the competitive edge of Chinese products is in meeting all kind of needs; we make inexpensive but quality products and also those for high-end markets.
Therefore, Chinese companies produce both high-end and low-end products, as well as expensive and inexpensive products to meet needs of their varied markets.
How are you working with African governments to stamp out this vice?
The Chinese government has taken a number of measures against the vice, but this is not a problem for the Chinese government alone. African governments need improve their capabilities in quality control, inspection and customs clearance so that, together, we can tighten the noose on makers of substandard products.
Some African countries don’t have the right technologies at custom points or the capacity to conduct quality inspections. To reduce the problem, the Chinese government provides technical assistance, personnel training and the necessary inspection facilities as a matter of priority.
China and African governments have the same objectives; to give people better products at affordable prices. So, we need to make joint efforts towards this objective and improve the quality of people’s lives.
What are the prospects for trade between China and Africa this year?
My general impression is that trade between Africa and China will continue to increase. Given the increases in trade volumes in the past few years, 2014 could give us a big surprise.