China’s Role in Connecting the African Continent

The success that China has achieved in developing its railroad infrastructure has also started to benefit the African continent, as China’s engineering expertise in this industry has been deployed across Africa, aiding landlocked countries such as Ethiopia with access to port infrastructure. Railway infrastructure investment is key to the development of economic opportunities in Africa.

East Africa has already benefited from Chinese finance, which has been used for the construction of two major railway projects. The Mombasa-nairobi Standard Gauge Railway (SGR), built in Kenya by China Road and

Bridge Corp., is financed by the Export-import Bank of China. At a cost of $3.2 billion, the SGR operates 30 freight trains and four passenger trains per day. Connecting the two largest cities in Kenya, the train exceeded initial expectations, with over 2 million rides taken in the first 17 months after the train’s official opening.

The second major railway project to benefit East Africa is the Addis Ababa-djibouti Railway. Inaugurated by Ethiopian Prime Minister Hailemariam Desalegn on January 1, 2018, the project provided Ethiopia, a landlocked country, with access to the Djiboutian port of Doraleh. With capacity reaching 24.9 million tons annually, the railroad project was accompanied by upgrades at the Port of Doraleh to expand existing handling capacity from 6 to 14 million tons.

Benefits of these railway projects were felt long before the respective projects had even been completed. Numerous jobs were created, from construction workers to engineers throughout the different phases. The opportunity to work alongside their Chinese counterparts, capacity building and skill development benefit African citizens beyond just access to advanced rail infrastructure.

In Ethiopia, people have greatly benefited from the expanded trade access that the Port of Doraleh provided, Chinese companies have also conducted training for local employees to equip them with the necessary industry knowledge to ensure the railway continues to be a successful tool for Ethiopian exports.

Export potential, job creation and skill development are just some of the benefits Chinese investment into Africa’s railway infrastructure has brought to the continent. Apart from providing access to new infrastructure, these projects may one day see Africa experience the high-speed interconnectedness that China enjoys following the rapid proliferation of its railway infrastructure.

China’s efforts to foster a more prosperous future for both itself and the global community as a whole were reaffirmed by President Xi Jinping while he met foreign guests at the 2019 Imperial Springs International Forum held in Guangzhou in December 2019. This was underscored by a reiteration of China’s commitment to values like multilateralism, openness and shouldering its responsibilities as it continues to pursue its current developmental trajectory. The forward-looking, future-oriented stance consistently taken by China’s leadership is evidence of its prioritization of improved outcomes globally.

China-africa Cooperation in Mining Expected to Be Strengthened

China has a diversified portfolio of investments across the African continent, with transportation infrastructure, energy plants and agriculture projects receiving billions through development funding and bilateral agreements. Finance for the mining sector, however, has been approached in a unique way by China. China has made multiple investments that have either further developed the productive capacity of existing projects, or provided the necessary funding for new projects. The year 2019 saw the inking of new deals in the mining sector, some with many long-term benefits for the developing economies of Africa.

Africa’s mineral deposits are valued in the trillions of dollars. However, with the rising costs of developing sustainable mines, with fixed costs related to exploration and infrastructure alone reaching into the tens of millions, many African countries, whose efforts are focused on poverty eradication, simply cannot afford to maintain these projects.

China’s Tsingchan Holding Group in April 2019 signed deals valued at $2 billion with Zimbabwe. These deals will see an expansion in mining activity in metals such as iron ore, nickel and chrome, providing great potential for struggling economies such as Zimbabwe.

While Zimbabwe is just an example of the numerous opportunities that the Sino-african relationship has yielded in 2019, Africa’s vast mineral and metal resources provide ample opportunities for the continent to lift its economic potential. The turn of the decade potentially holds greater promise for this vital source of income for Africa. CA

Digital Economy

About 51.3 percent of China’s GDP would be digitalization-related by 2023 as the country’s enterprises step up digitalizing their businesses, global market intelligence firm IDC predicted.

The research firm estimated that by 2025, at least 80 percent of China’s new corporate applications would use artificial intelligence technologies.

Chief information officers would play bigger roles within companies by planning for innovative development, while there would be rising demand for professionals in ensuring digital security and compliance, IDC said. China is on fast track for digitalization, while firms should develop future-oriented strategies to prepare for related changes, said Kitty Fok, IDC China’s managing director.

Chinese firms’ spending on digital transformation has expanded over a threshold by accounting for 51 percent of their total information technology (IT) expenditure this year, a previous report by IDC and Chinese IT firm Inspur showed.

Boosting Border Trade

China has decided to adopt a slew of measures, including tax and fiscal policies, to enhance the innovation and development of border trade, according to the Ministry of Commerce.

The measures include value-added tax exemption policy and simplified declaration process for small-scale border trade exports at pilot areas, and properly increasing amounts of local government bonds in border areas, to support infrastructure construction in border (cross-border) economic cooperation zones and key development and opening-up pilot zones.

Foreign Trade Growth

China’s foreign trade registered steady growth in the first 11 months of 2019 by expanding 2.4 percent year on year, the General Administration of

Customs (GAC) said.

During the period, the total foreign trade volume reached $4.14 trillion. Exports climbed 4.5 percent year on year to $2.26 trillion, while imports hit $1.88 trillion, the data showed.

Despite global economic and trade slowdown, China’s foreign trade still maintained stable growth this year, showing the resilience of the Chinese economy, said Li Kuiwen, Director of the GAC’S statistics and analysis department.

Trade with the Belt and Road participating countries rose 9.9 percent to $1.21 trillion from January to November, accounting for 29.3 percent of the total trade.

Improving Business Environment

With the introduction of the regulation on improving the business environment, China will take further steps to foster a world-class, market-oriented business environment governed by a sound legal framework.

The regulation, which is scheduled to be implemented on January 1, 2020, draws upon China’s successful practices and experience in recent years in transforming government functions and improving the business environment.

The regulation has also set in a legal framework for building a world-class, market-oriented business environment governed by a sound legal framework. Local governments and departments are required to swiftly issue supporting measures and bring all existing ordinances and normative documents in line with the regulation by revising or repealing any inconsistencies.

Payment Supervision

The People’s Bank of China, China’s central bank, has been tightening supervision on the payment institutions to ensure quality development of the sector, Vice Governor Fan Yifei said at a forum on November 28, 2019. Supervision has been tightened since 2015 to tackle problems in the sector and the payment institutions have been reduced to 236 at present, Fan said.

The central bank will crackdown on unlicensed institutions, standardize innovation, control cross risks and stay vigilant about nesting financial products around payment business, Fan said.

The regulatory system should be strictly enforced to prevent the licensed institutions from carrying out business beyond their scopes and without permission, and the real-name account system should be effectively implemented, Fan said. CA