Driving Industrialization
China-africa industrial capacity cooperation benefits africa’s industrialization process
the 10th BRICS Summit, concluded in Johannesburg, South Africa this July, once again brought to public attention the key words “industrial revolution” and “industrialization in Africa” with its theme “BRICS in Africa: Collaboration for Inclusive Growth and Shared Prosperity in the Fourth Industrial Revolution.” The FOCAC Beijing Summit in early September further relates the future development of China to that of African countries with the theme “China-africa: Toward an Even Stronger Community with a Shared Future through Win-win Cooperation.”
Can Africa become the next “world factory”? Is it possible to turn its resource endowments into advantages for the development of “Made in Africa”? What role can China-africa industrial capacity cooperation play in Africa’s industrialization? These are all important issues related to the development of Africa.
Industrialization in Africa
Industrialization is an important foundation for modernization and the inevitable way for a country to develop its economy. Despite its abundant natural resources and large young population, Africa has been on a long and tortuous path to industrialization due to its long colonial history and undiversified economic structure. With industrialization levels remaining low in most African countries, Africa as a whole is at the primary stage of industrialization, with its industrial output value accounting for less than 3 percent of the world’s total. According to the standards given in a report released by the United Nations Industrial Development Organization in 2014, there is no industrialized country in Africa. Mauritius, South Africa and Tunisia are the only ones emerging to be industrialized countries, and the rest are either developing or underdeveloped industrial economies.
Industrialization has been an important goal of African countries since their independence. It is believed to be a way to get rid of their economic dependence on their former colonizers and restructure their economies to be more independent. Although they have never given up exploring, their industrialization is slow-paced and facing serious challenges as a result of intertwined effects of domestic and international factors, such as the volatile international market and their deficient policy making and implementation.
Since the beginning of the 21st century, African countries have been engaging in industrialization with even more enthusiasm as a response to economic globalization. Together with the African Union (AU), they have developed key strategic plans for development, such as the New Partnership for Africa’s Development, the Action Plan for the Accelerated Industrial Development of Africa, the Program for Infrastructure Development in Africa and the Agenda 2063, in the hope that the 21st century would be an era for African development through industrialization and economic integration. The most representative of these is the AU’S Agenda 2063, which has established the directions for social and economic development in Africa for the next 50 years. It aims to increase the added value to African resources and optimize the economic structures of African countries through industrialization and the development of the manufacturing industry, to make Africa a continent with macroeconomic stability, diversified economic structures and sustainable and inclusive economic growth by 2063.
As part of their efforts to realize the vision of industrialization and the Africa aspiration, African countries, starting from a low point, hope to establish partnerships with other emerging industrialized countries.
Industrial capacity cooperation
China-africa industrial capacity cooperation is in line with the needs of both China and African countries and has the potential
to develop. After 40 years of reform and opening up, China is now at the mid-tolate stage of industrialization, with a large amount of accumulated surplus industrial capacity. It has the capital, technologies and equipment for development and rich experience in growing from an agricultural country to a “world factory.”
Most African countries are in the initial stage of industrialization with a strong demand for products like steel and cement, which are basically imported. Therefore, they are eager to accelerate industrialization by introducing the industrial capacity to produce these products. They have abundant resources, cheaper labor force and a market with great potential, while China’s industrial capacity and equipment/technology fully meet their needs. This means they are in the best position to be a major destination of China’s transference of industrial capacity, equipment and technologies.
China-africa industrial capacity cooperation enjoys strong support from governments and enterprises. The visits to Africa by Chinese President Xi Jinping in 2013 and Premier Li Keqiang in 2014 unveiled China’s plan to help promote the development of Africa’s railway, highway and regional airline networks and industrialization. African countries are also keen to strengthen industrial capacity cooperation with China in its new round of industrial restructuring and boost industrial development and technological progress in Africa by introducing China’s high-quality industrial capacity. The flagship projects leading the cooperation will mostly be cross-border and even cross-regional large infrastructure projects in Africa and industrialization projects that will drive the development of Africa’s manufacturing capacity.
In addition to large-scale state-owned enterprises, which have been active in the energy and mining industries and
large-scale infrastructure construction projects, more private Chinese companies will be seen in China-africa industrial capacity cooperation in the future. In particular, Chinese private companies in the light industry, rich in production experience and highly skilled, will be the main force in international industrial capacity cooperation.
Economic zones bearing fruit
After years of unremitting efforts, ChinaAfrica industrial capacity cooperation has yielded a lot of early gains. Since the FOCAC Beijing Summit in 2006, China has established six overseas economic and trade cooperation zones in five African countries of Ethiopia, Nigeria, Zambia, Mauritius and Egypt. There are nearly 100 China-african joint industrial parks under construction or in operation. By the end of 2017, China’s investment stock in Africa had exceeded $100 billion with more than 3,500 Chinese companies operating on the continent.
On January 27, 2015, China and the AU signed a memorandum of understanding on infrastructure construction cooperation. According to the memorandum, China will strengthen its cooperation with African countries in railways, highways and regional airlines and industrialization within the framework of Agenda 2063, to promote African integration. Among the first batch of countries to cooperate with China, such as Tanzania and Ethiopia, China-africa industrial capacity cooperation is already paying off.
For example, Tanzania was one of the first African countries to join China’s industrial capacity cooperation programs. On April 28, 2015, a framework agreement on industrial capacity cooperation was signed between the two countries. Tanzania’s five-year plan under formulation at that time was also centered on industrialization so as to align with the industrial capacity cooperation with China. The country has been constructing an export processing zone since 2009. It hopes to develop export-oriented industries to attract foreign investment, expand exports, increase employment, and improve production technology and economic management. There are currently 12 companies from China in the export processing zone.
The China-egypt Suez Economic and Trade Cooperation Zone is another example. It is located at the beginning of the development zone of the Suez Canal Corridor, where Egypt’s high-quality resources will be preferentially placed. This unique advantage it enjoys is favorable for the strategic cooperation between the two countries and may promote the transfer of China’s industrial capacity to Egypt. By June 2017, it was home to 65 companies (including 32 manufacturing companies and 33 supporting services providers), attracting nearly $1 billion in investment and creating more than 3,000 local jobs.
In short, the construction of infrastructure and industrial parks, which are regarded as the “two wings” of China-africa industrial capacity cooperation, is now booming in Africa. China has also helped Africa build a number of railways, including Mombasa-nairobi Standard Gauge Railway, Addis Ababa-djibouti Railway, and the railways built in Angola and Nigeria.
According to Kenyan President Uhuru Kenyatta, Mombasa-nairobi SGR would lay the foundation for Kenya’s new chapter of industrialization. The first year of the railway’s operation witnessed the smooth and safe transportation of more than 1.38 million passengers and more than 60,000 containers. Over 46,000 jobs have been created, more than 5,000 technicians and managerial personnel have been trained, and over 100 Kenyan students are in China completing railway-related undergraduate programs. The railway has greatly facilitated the movement of people between Nairobi and Mombasa, and the time for cargo transportation has been shortened from more than 10 hours to about four hours, reducing logistics costs by up to 40 percent. The construction of the railway accounts for 1.5-2 percent of Kenya’s GDP growth, and has led to the formation of a commercial ecosystem along the railway and the development of the entire industry chain, including ports.
The visits to Africa by chinese President Xi Jinping in 2013 and Premier Li Keqiang in 2014 unveiled china’s plan to help promote the development of Africa’s railway, highway and regional airline networks and industrialization.
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niyanshuo@chinafrica.cn
* The author is senior researcher of the charhar institute and a researcher of the institute of Westasian and African Studies, chinese Academy of Social Sciences