China Center for International Economic Exchanges

Wei Jianguo: Africa will become China’s largest export market in the next five years
Date:Sep 04,2018    Source:CCIEE

The opening ceremony of the 2018 Beijing Summit of the Forum on China-Africa Cooperation was held in the Great Hall of the People. As an important mechanism for dialogues and pragmatic cooperation between China and African countries, the leaders attending this forum focused on the theme of “Toward an Even Stronger Community with a Shared Future through Win-win Cooperation” ??and planned a “road map” for China-Africa cooperation in the new era.

Wei Jianguo, a special expert of the China Going Global Think Tank (CGGT), former Vice Minister of Commerce, and Vice Chairman of China Center for International Economic Exchanges, said at a seminar held in Beijing recently that Africa will replace the United States to become China’s largest export market in the next five years. He also argued that the US economic strength can hardly match that of China because the Chinese economy has great resilience and controls the entire industrial production process. Therefore, China can make long-term preparations for the trade war. The China-Africa economic and trade cooperation will make an important contribution to the world economy, and the unilateralist trade policy based on “America First” will not last long.

In order to answer the question: how will the China-Africa cooperation impact the current world economic and trade development pattern, the CGGT had an interview with Mr. Wei.

Key Viewpoints:

1. Currently, the United States has further increased its containment against China, trade protectionism and unilateralism. It even claims that China explores Africa, treats Africa unfairly and is a new colonizer of Africa. This China-Africa conference shows the world that the China-Africa cooperation is a true mutual help between the two brothers, no political preconditions are attached and has great potential for cooperation.

2. The China-Africa cooperation has expanded from previous infrastructure construction, including agriculture, roads, railways and bridges, to the current service industry.

3. The China-Africa cooperation has several shortcomings: the cooperation has attached great importance to trade, infrastructure, short-term interests and direct economic help to Africa but failed to pay enough attention to investment, long-term benefits and help African nations to enhance their “soft power” and endogenous growth.

“In 2017, the trade between China and Africa reached US $170 billion and this figure will increase to 400 billion by 2020. In the next five years, the China-Africa economic and trade cooperation is expected to surpass the China-US economic and trade cooperation. The China-Africa Cooperation Forum will effectively help the two sides to achieve these goals,” said Wei Jianguo at the interview with CGGT.

The China-Africa cooperation has set a good example for cooperation between one country and all countries on the same continent.

CGGT: The 2018 Beijing Summit of the China-Africa Cooperation Forum is not only the largest conference held in China this year, but also attended by the largest number of foreign leaders, what is the significance of this forum?

Wei Jianguo: The China-Africa Economic and Trade Cooperation Forum has gone through 18 years of hard work and provided a very important platform with the followings five important characteristics:

First of all, the China-Africa cooperation has set a good example for cooperation between one country and all the countries on the same continent. Based on the concept of “truthfulness, honesty, friendship and sincerity”, the China-Africa cooperation is aimed at building a win-win, mutually beneficial and equal relationship between China and Africa. The comprehensive strategic partnership established by China and Africa has set a great example for unity and cooperation in international affairs. The two sides have opened a new chapter in creating a strategic partnership between the world’s largest developing country and the largest continent with the most developing countries.

Second, the China-Africa Cooperation Forum has set an important example for the “South-South cooperation”, helping us to build a fairer, more reasonable and better economic and trade cooperation framework.

Third, the 2018 China-Africa Economic and Trade Cooperation Forum 2018 will open a new era for the China-Africa economic and trade relations and achieve more consensus on economic and trade cooperation under the wave of anti-globalization.

Fourth, currently, the United States has further increased trade protectionism, unilateralism and its containment against China. It even claims that China explores Africa, treats Africa unfairly and is a new colonizer of Africa. This China-Africa conference shows the world that the China-Africa cooperation is a true mutual help between the two brothers, no political preconditions are attached and has great potential for cooperation.

Finally, the China-Africa Cooperation Forum will come up with more measures to promote economic and trade cooperation. The cooperation between China and Africa will expand from economic and trade relations to a comprehensive cooperation, covering political security, society, ecology, culture, sports, education, and scientific research.

The rapid advancement of the China-Africa economic and trade cooperation will help China to reduce its dependence on the US market.

CGGT: What is the status quo and prospect of the China-Africa economic and trade cooperation? Which areas will have priority?

Wei Jianguo: The China-Africa economic and trade cooperation has developed rapidly over recent years. When I was working as Director-General at the Ministry of Commerce, the trade volume between China and Africa was only US$ 800 million in 1992. Eight years later, the imports and exports increased by 10 billion. In 2010, the trade volume increased to 100 billion. By 2020, the trade between the two sides is expected to increase to $400 billion from $220 billion in 2014.

The following three goals can be achieved by accelerating the China-Africa trade and economic cooperation.

First, it can achieve better market diversification and allow Africa to play an important role. At present, Africa is the fifth largest trading partner of China and I hope that it will surpass the US in the next five years, which is completely achievable.

Second, we should promote the China-Africa cooperation as soon as possible, reduce our reliance on the United States, maintain the growth rate of China’s imports and exports, and achieve trade balance between China and Africa so as to bring tangible benefits to Africa. So far, China has provided $35 billion of preferential loans and export credits to African nations, and $5 billion to African SMEs (the actual figure is likely to be 6 billion). More importantly, China strives to increase its direct investment in Africa from $32.4 billion in 2014 to 100 billion in 2020.

Third, China-Africa cooperation has expanded from infrastructure construction, including agriculture, roads, railways and bridges, to the current service industry, especially in manufacturing, tourism, agriculture, health and hospitals construction. At present, China’s private enterprises also want to expand their businesses to Africa and they have established about fifteen industrial parks there. Some of these industrial parks are mainly built by Chinese SOEs, and some are built mainly by companies from different provinces and cities in China. The industrial parks will help Africa to build a solid and large-scale industrial base, which is very important.

The “China-Africa Top Ten Cooperation Plan” has been steadily implemented by the acceleration of the “China-Africa Cooperation Forum – Johannesburg Action Plan” (2016-2018). During the cooperation, China and Africa signed 22 agreements, covering infrastructure, chemicals, finance and other fields, with a total amount of US$13 billion. China has trained 200,000 professional and technical personnel for Africa, provided 1 billion yuan of emergency food transportation to Africa, and encouraged Chinese companies to participate in the construction of railways, highways, motor transport, aviation, ports, electricity, telecommunications in Africa. In order to strengthen Africa’s sustainable development, China has supported Africa to implement 100 projects of clean energy and wildlife conservation. To help Africa with poverty reduction, China and Africa implemented 200 “happy life” projects, which has brought great benefits to women and children. In terms of healthcare, the two sides have conducted cooperation in public health prevention and control system.

The sixth Forum on China-Africa Cooperation is expected to reach better results and more cooperation agreements.

China-Africa economic and trade cooperation: problems and Opportunities.

CGGT: What are the risks and challenges facing the China-Africa economic and trade cooperation? What are the responses?

Wei Jianguo: The China-Africa cooperation has several shortcomings: the cooperation has attached great importance to trade, infrastructure, short-term interests and direct economic help to Africa but failed to pay enough attention to investment, long-term benefits and help African nations to enhance their “soft power” and endogenous growth.

In addition, China’s private companies have greater potential for expanding their business globally. Africa needs Chinese companies to invest and we should give private enterprises more policy supports by signing more bilateral investment protection agreements and bilateral free trade agreements with the African Union or other regional organizations in Africa to reduce tariffs. There are four important regional organizations in Africa, including the East African Community, the Economic Community of West African States, the Economic Community of South African States, and South African Economic Cooperation and the East and South African Community, which can provide private enterprises with new markets. China’s manufacturing industry has been suppressed by the United States and one possible solution is to move the personnel and equipment to Africa due to the agreements between Africa and the United States: If the unilateral processing exceeds 30%, the enterprises in Africa will be able to enjoy tax-free treatment for exports to the United States.

The gradual development of Africa has brought enormous opportunities for Chinese companies and they can find good local partners in industrial capacity cooperation, including equipment, processing, and manufacturing. Furthermore, Chinese companies should increase their investments in such products as clothing, shoes, toys, motorcycles, refrigerators. Establishing local factories will not only help local employment, but also improves local fiscal revenues, and more importantly develops local national economy and industrialization.

President Xi Jinping repeatedly emphasized at the China-Africa Cooperation Forum that there is a famous saying in Africa called “He who travels alone goes fast, but he who travels in company goes far,” which has pointed out the direction for the next step of the China-Africa cooperation and the trend of the world economic and trade cooperation.

 

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