Expert seeks balancing act

Chinese-built special economic zones in africa among 'promising efforts'

As China maintains its position as the top trader with Africa, efforts must be made to ensure that trade between the two remains balanced, says David Shinn, former US ambassador to Ethiopia and Burkina Faso.

China's trade figures with Africa appear evenhanded, with a balance of imports and exports fueling positive growth opportunities for both parties, he says.

On paper, things appear the healthiest they have been in years, Shinn says, speaking from Washington, where he now works examining the China-Africa relationship as an adjunct professor at the Elliott School of International Affairs at George Washington University.

"In the past couple of years, China has had a small trade deficit with all countries together," he says. "It used to have a small trade surplus or modest trade surplus but in the last couple of years it's actually had a deficit."

China is one of the world's largest exporters of consumer goods, so a deficit with African nations means there is room for growth, he says.

"If you take China-Africa trade in its totality it's about in balance. In other words, it looks pretty good from the standpoint of fairness if you count up all 54 countries in Africa."

China accounts for about 15 percent of trade flowing through Africa, making it the continent's biggest trading partner.

When the numbers are broken down country by country, it can be seen that while investment from China in Africa is spread far and wide, 15 of the continent's 54 countries account for much of that.

In other countries, a surplus of Chinese trade generated by competitive pricing on Chinese goods has created cause for concern for African leaders looking to strike a mutually beneficial economic relationship.

Identifying Kenya as one of the countries where a trade deficit has created uneasiness, he says that while consumption of Chinese goods continues to grow, Kenyan producers are offering very little in return to balance trade.

Counting Kenya's largest exports such as tea and tobacco, both readily supplied by producers in China, the Bank of Kenya announced an overall trade deficit of $826.2 million at the end of last year.

"This is something China is aware of, and they're taking remedial measures toward improving the situation," Shinn says. "But it's very hard to fix."

One measure China has taken is to allow imports from 26 of the least developed African countries free of tariffs.

The US took similar measures through its African Growth and Opportunity Act, even though the US has a trade deficit with Africa, importing more African goods, generally oil, than the goods the US exports to the continent.

"The problem is that neither the American program nor the more limited Chinese program has really made a huge dent in this," Shinn says.

More recently China has created seven special economic zones in Africa, similar to those that sparked the initial economic boom for the world's second-largest economy.

"The goal of these is to encourage Chinese investors to go into the countries where you have the zones and help build up the industrial base, particularly the industrial base for export of African products."

Modeled to some extent on China's special economic zones, he says the zones - two each in Nigeria and Zambia, and one each in Egypt, Ethiopia and Mauritius are among the more promising efforts he has seen by any country to encourage African exports.

Shinn became interested in China-Africa relations in 2005 and has become a prolific commentator on the evolving relationship, drawing on 37 years in the US Foreign Service, including postings in Africa.

His curiosity was first piqued after he noticed big spikes in trade between China and Africa, he says.

"I travel around Africa a fair amount, and it soon became obvious that China was coming on as the major trade partner in Africa. It achieved that in 2009."

In 2012, Shinn co-authored the book China and Africa: A Century of Engagement with Joshua Eisenman, senior fellow in China Studies at the American Foreign Policy Council.

The book, examining China's relationship with African countries case by case, and examining the historic relationships as well as current trends in trade, was listed in Foreign Policy magazine's top books on Africa in 2012.

Shinn, following the progression of one of the most important geopolitical pairings in modern times, says trade between China and Africa may be understated.

With the volume of trade between the two is constantly in flux and difficult to track, figures often underestimate the amount of investment flowing from China, he says.

"Part of the problem is definition. It's still not totally clear to me how China defines foreign direct investment. I suspect today that China may be investing more in Africa than any other single country. Their cumulative investment is not the highest; the United States, which has been doing it longer, has more cumulative investment.

"But if you look at new annual investment going into Africa, China might be No 1."

As to whether or not the two biggest investors in Africa will ever join forces to collaborate on projects, Shinn says it is possible, and there is huge potential, but only in certain areas.

With investment in African countries from many Western countries often carrying political conditions pertaining to human rights and China vowing not to get involved in internal politics, there is often a hesitancy about working together on projects, he says.

"If you can identify a country that would not be subjected to these conditions by the US on the one hand, and if in fact there is a project that both China and the US could make an individual contribution to on the other, that would be to the mutual advantage of the African project, then absolutely this should be done."

In the lucrative health field, the US and China, with their different approaches to medicine, could make a big impact if they worked together, he says.

"Both China and the United States have some value-added products to counter malaria in Africa, and could, I think, bring together their programs in a cooperative way that would help combat malaria in any number of African countries."

toddbalazovic@chinadaily.com.cn

(China Daily Africa Weekly 02/14/2014 page38)