Economic restructuring can help others

As the 'factory of the world' goes upmarket, transferring its industrial capacity and skills is ideal for less-developed nations

China's transfer of its industrial capacity, as well as skills and other support, would benefit countries such as those in less-developed areas of Asia, Africa and Latin America as well as helping China, experts say.

Seyoum Mesfin, Ethiopia's ambassador to China, described such capacity cooperation between Ethiopia and China as very important for both sides. Mesfin spoke during a recent forum hosted by the China-Africa Business Council in Beijing.

China has become Ethiopia's biggest trading partner, and bilateral trade in 2015 reached $4 billion. China's direct investment in Ethiopia reached about $1 billion. With China's support, Ethiopia is pursuing important infrastructure projects that make it more attractive for foreign capital, he says.

Feng Hongcheng, secretary-general of the China International Industrial Capacity Cooperation Forum, says China's economic new normal is about adjusting its economic structure and making an economic transformation.

China's exports in recent years have seen a great change from low-end industrial products to industrial chains of middle- and high-end products and models of infrastructure construction. As a result, Feng says, India and some African and Latin American countries can be important partners for transferring some of China's industrial capacity.

"There is great opportunity for capacity cooperation with these countries. After a lengthy period of development, China has amassed a large amount of foreign reserves and also advantages in the equipment manufacturing industry. These emerging countries have a large demand for infrastructure, building materials and equipment," Feng says.

"This capacity includes infrastructure, equipment, skills and so on, and Chinese companies' abilities in these aspects have been improving. Many of them are taking our skills, talent and capital abroad, providing industrial materials and project experience to other countries."

Cao Jiachang, deputy director-general of the department of Western Asian and African affairs at China's Ministry of Commerce, calls capacity transfers a definite must in China-Africa relations. Africa's industrialization is not fully developed yet, and the economic level is not high, either. "But we always have considered Africa a region full of potential. Africa has the need for industrialization, and because China is at a different developmental stage, we are able to work with Africa to make that industrialization happen," he says.

Yu Yue, deputy director-general of the department of Latin American and Caribbean affairs at the Ministry of Foreign Affairs, says transfer of international capacity is a way for China to speed up its economic transformation, changing from a world factory that makes ordinary products to a production center for advanced equipment. Advancing their ability to go global also helps Chinese companies become more competitive in the international sphere.

"International capacity cooperation also meets the realistic needs of developing countries," Yu says. "At present, many developing countries in Asia, Africa and Latin America are still at the first stage of industrialization and have a huge demand for international capital, equipment and skills. China has good capacity that would meet the needs of the developing countries, with advanced technology and sufficient capital support, and would be important capacity cooperation partners."

In the past few years, China's capacity transfers to Latin America have led to a lot of advancement, and the rate of Chinese companies going to Latin America is speeding up. China also has announced a $30 billion special fund for China-Latin American capacity cooperation, Yu says.

But she suggests Chinese companies that want to go global should first do their homework on Latin America, including the different culture and background, business codes, laws and regulations.

Moreover, they should be dedicated to a long-term management role and shoulder their social responsibilities, and also provide training to local employees and transfer skills.

Contact the writers through: chenyingqun@chinadaily.com.cn

(China Daily Africa Weekly 03/25/2016 page28)