Africa needs to adapt to change

It is important for economies to plan and learn from Chinese experience

The African continent has seen considerable growth over the past 10 years, after two lost decades at the end of the 20th century. It is now the second-biggest growth region in the world, largely due to increased global commodity prices, driven by demand in East Asia.

But change is also happening in African economies, and reforms mean that the growth is not all based on commodities. What can be learned by African economies from China's growth?

China needed external finance for domestic growth, so it opened up to the world. The need to attract foreign direct investment is one that African countries also face. Why did China succeed in what African countries still aspire to?

First, labor in China was cheap and abundant, initially keeping production costs very low, and investment in education has paid off, gradually increasing the skills level in the country.

The skills improvement did not happen automatically, but required policies in place. Some policies, such as a preference for joint ventures, were not popular among investors, but China offered the potential of economies of scale. The country has a huge and ambitious population, so its potential was big enough to sweeten some of the bitter pills that Chinese policymakers prescribed for investors: joint ventures were demanded, in order to transfer skills, technology and wealth.

Furthermore, decision-making on the broad strategy and the overall goals was centralized, while the implementation of policies and their specific adjustment to situations on the ground were handed to lower levels of government — levels that actually felt the benefits or flaws of rules and could thus discuss with investors on how to make them better fit the respective situation.

Many of the first investors were from the Hong Kong Special Administrative Region and Taiwan, as well as from among the Chinese diaspora in Asia, so they knew the situation in the Chinese mainland, including the cultural context and language.

From this basic picture, I would take three main reasons for China's success: large population as a labor force and potential market; strong investment in education and skills development; and long-term planning and monitoring, allowing for decentralized implementation.

How is Africa different from China with regard to these conditions? While the continent has areas of very high population density that could serve as growth poles, populations are diverse. Skills are increasing but need to be developed much more.

In a world that operates with global markets, skill levels are much more important than size of domestic population. Similar to China, Africa's middle class is growing. These mostly urban consumers are a crucial driver of society. Yet, unequal growth requires new political skills and reaction in state management that go beyond the rent-seeking behavior of the past.

An element for success that is often overlooked in African discussions is China's use of evidence in policy planning; that is, experimenting with regulation in selected areas. Not least among them were the reform laboratories of the special economic zones in southern China. Lessons learned from successful elements were replicated and used in other places, while elements that did not produce the desired success were modified.

In other words, Chinese planners learned and continuously modified the model to meet the needs of the level of development.

China was big enough to fence off unsolicited policy advice, keeping the regulations focused on local conditions.

Yet, China's growth path was not unique. The speed of it might have been, and the fact that we saw growth in a huge country with massive effects on poverty reduction. But the path to industrialization and modernization was and is roughly following the trajectory that other states have taken, from the beginning of industrialization in Europe and North America to the various success stories in East Asia; from cheap labor and excessive environmental costs to developing a skills-based economy with its own brands.

The lessons for Africa to learn are therefore not, strictly speaking, Chinese ones, but lessons from other countries' development. There is no model to replicate without adapting it to one's own situation. This means continuous adaptation to changing situations.

The setting in 21st century Africa is very different from China in the late 1980s, let alone Europe in the 1880s. African countries face a globalized world, in which the very success of China is, in fact, also creating competition that African aspirations have to take into account.

However, economics is not a zero-sum game. Exchanges between China and Africa can bring gain to both sides. Yet, Africans would need to keep an eye on the added value of their products; this is the structural challenge in China-Africa trade.

The author is director of the Centre for Chinese Studies at Stellenbosch University, South Africa. The views do not necessarily reflect those of China Daily.