Driv­ing In­dus­tri­al­iza­tion

China-africa in­dus­trial ca­pac­ity co­op­er­a­tion ben­e­fits africa’s in­dus­tri­al­iza­tion process

ChinAfrica - - OPINION - By He Wen­ping

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.

* Com­ments to

niyan­[email protected]­nafrica.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

The photo taken on June 10 shows a bridge built by China Road and Bridge Corp. in Braz­zav­ille, cap­i­tal of the Re­pub­lic of the Congo

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