Moderator: Dr. Ross Anthony, Centre for Chinese Studies, Stellenbosch University
Speaker 1: Dr. Shelly Mao Xiaojing, Chinese Ministry of Commerce
Speaker 2: Dr. Tang Xiaoyang, Tsinghua University, International Studies, Beijing
The discussant 1: Prof. Fantu Cheru, Nordic Africa Institute
The discussant 2: Carine Kiala, Adviser on Trade and Investment of the Consulate General of the Republic of Angola in Hong Kong SAR
Dr. Shelly Mao Xiaojing, Chinese Ministry of Commerce - China's aid in promoting African urban development
China is developing new strategic partnerships around support for infrastructure, agriculture, manufacturing and small and medium-scale enterprise development (SMEs). Support encompasses assistance with human resource development, medical, environmental and water supply services. China’s aid White Paper outlines four strategies: Building capacity in African countries; Economic and political support to African countries; Creating mutual benefits China-Africa; Sustainability, which is a challenge for both China and Africa. All is within the overall rubric of friendship and peace between Chinese and African governments. Africa is expected to surpass Asia in volume of Chinese aid. In terms of human resource development there were 33,500 Africans trained by end 2010. Preferential buyers’ credits and SME loans help implement Chinese aid. But there are challenges of project design and how to avoid “white elephants”.
The discussant, Carine Kiala, Adviser on Trade and Investment of the Consulate General of the Republic of Angola in Hong Kong SAR asked for more depth in the discussion of aid and its definition, how it is disbursed and its impacts. In particular, who benefits from Chinese aid? The work of Development Workshop described in the first session shows how civil society organizations can provide more detailed feedback on uptake and impact of Chinese-supported projects and this aspect should be strengthened.
Dr. Tang Xiaoyang, Tsinghua University, International Studies, Beijing - The impact of Chinese enterprises on Africa's urban employment.
Data on the impacts of Chinese trade and investment in Africa were presented and critically analyzed, responding to the challenge of how to establish an effective measurement system. In fact official statistics on employment levels are not always reliable, while the effects of local employment creation in Africa may be only temporary, as for example in construction where low or no skills are required, while the main basis of trade is minerals and oil. Such a trade is imbalanced and not sustainable, and a different path based on local manufacturing would have better outcomes for Africa. At present African manufacturing is negatively impacted by Chinese imports, as in the textile industry and local shoe production in Addis Ababa. Chinese telecom and auto industries in Africa affect only a small part of the value chain and are not relevant to the urban poor. China can export manufacturing industries to Africa where labor is ten times cheaper, but African SMEs cannot cope with such competition. On the other hand, despite low labor costs and tariffs allowing export to EU and USA, Africa’s weak infrastructure and logistical capacity mean productivity is lower than in Asian countries. To sum up, a transfer to manufacturing from construction is a challenge that must be orchestrated to benefit the urban poor.
Discussant: Prof. Fantu Cheru of the Nordic Africa Institute
Prof. Fantu Cheru agreed with the presenter about the need for a shift from construction to manufacturing, but thought China is more likely to shift its manufacturing base to Western China than to Africa. He felt that an approach linking agriculture and industry in Africa, focused on rural-urban linkages and the role of secondary towns would be more likely to lead to agriculture-led development of industries. Infrastructure development alone is not going to produce sustainable economic or urban development. The whole value chain has to be addressed.
Participants discussed the theme referring to the two papers, and emphasized a distinction must be made between Chinese aid (the first paper) and trade (the second paper) as they have different aims and modalities. Trade is much larger than aid. China must clarify these and develop some flagship pro-poor initiatives and assess their impact. It must also maximize sustainable pro-poor employment from its transportation and infrastructure projects. However, there are large variations across Africa in urbanization levels and patterns so the pattern of investment must also vary. Although there are efforts to create local employment, absorptive capacity is weak and the lack of African capacity is often linked to corruption. The strategy of creating Special Export Zones and opening up market supply value chains in the continent may take a long time (15-17 years). This may take a learning and adaptive strategy “touching the stones” in an analogy to crossing a difficult river.
Many aspects of this difficult path ahead were discussed, including the inherent conflict between economic efficiency and targeting the urban poor, including issues of human rights. Empowering African governments on pro-poor approaches will also require some intellectual inputs. A gap was identified in China’s process of technology transfer and capacity building, with too much focus on the high level training but not enough on local skills development. China also lacks public opinion outreach on its approaches. Its aid has increased so rapidly (comparable to the 1940s Marshall Plan) that it is bound to have a steep learning curve. FOCAC has begun a China-Africa exchange to inform and involve African officials and more scholars need to be included. China is responsive to all the needs but has a very small capacity, for example in the Ministry of Commerce. It is possible there should be a shift to a Chinese development agency.
The discussant’s emphasis on agricultural development was endorsed as well as the importance of rural urban linkages and the food supply chain and urban food security. Also discussed were issues such as the impact of Chinese informal traders competing with African SMEs and the need to develop African value-added products for export and improve the balance of trade. The moderator stressed the need to retain the workshop focus on urban development but found the papers had generated healthy debate. The workshop had to focus on problems and lessons to be learned.