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2011 China-Africa Investment Cooperation Symposium
Special> 2011 China-Africa Investment Cooperation Symposium
UPDATED: September 2, 2011
Engaging as Equal Partners

Trade volume between China and Africa hit a record last year, sending out positive signals about economic and trade cooperation. China's robust economic activities, and enhanced cooperation between the two sides, have dragged bilateral trade out of the shadows of the global economic crisis, and helped China emerge as Africa's largest trading partner in 2009. Professor Mthuli Ncube, Chief Economist and Vice President of the African Development Bank, spoke with ChinAfrica reporter Yu Nan to share his views about the role China has had in Africa's economic development in recent years. Edited excerpts follow:

CHINAFRICA: You have said that China is becoming "Africa's new economic partner." In what ways is this happening?

MTHULI NCUBE: China has become a "new partner" for Africa in many ways. First, China is a trading partner. China's trade with Africa is growing and currently accounts for about 10 percent of Africa's international trade. China mainly imports natural resources in the form of oil and minerals. Africa mainly imports machinery, equipment and manufactured goods from China.

Second, China is a source of foreign direct investment in Africa. Chinese banks and other companies have been investing in companies in Africa. The Export and Import Bank of China is involved in extending credit for trade purposes to African financial institutions. China has been investing in the mining sector and also in infrastructure. As an investor, Chinese institutions have been adding value in order to diversify African economies. China is beginning to invest in industrial parks in various African countries, which will stimulate their manufacturing activities.

Third, China is a source of aid and also structures its investment decisions in a way that supplements and in some cases substitutes traditional aid flows to Africa. Aid flows to Africa from traditional sources in the West are likely to remain flat if not decline. On the other hand, Africa's financial resource and technical needs continue to be enormous. China is therefore filling a gap in providing aid to Africa.

What are the differences between this Chinese partnership and that of Africa's partnership with Western countries?

China seems to be engaging Africa as an equal partner without too many preconditions. In a way this is positive, but of course not in all cases, as African policy-makers would like to be judged on "outcomes" rather than "inputs." They would want to make decisions and structure relationships and be judged on economic outcome of those decisions. The Chinese approach is consistent with that sentiment. It is also true that in areas where there have been human rights concerns in Africa, Chinese investors have been cautious.

A Chinese Government December 2010 white paper on China-Africa economic and trade cooperation showed bilateral trade jumped 43.5 percent year-on-year during the first 11 months of 2010. What is your view on this trade trend?

The jump in trade activity reflects the growing and strengthening economic relationship between China and Africa. My prediction is that this trend of growth in trading activity will continue to rise over the next five years. Africa will exhibit good economic growth in the next five years, and so will China. Therefore, the trend in trade flows will continue to increase over the period.

What are your views on China's shift from government assisted cooperation in Africa to encouraging investment in the continent?

What Africa really needs the most is investment, in all areas. China's approach of focusing on investment is quite appropriate. Indeed, African countries prefer investment to mere aid, as investment benefits are sustainable over the medium to long term. Africa offers high returns for investment and so foreign investors should seize the opportunity of investing in Africa.

What can Africa learn from China's growth model and how suitable is China's growth model for Africa?

The one lesson Africa can learn from China is to invest in infrastructure. Investing in infrastructure alone will add almost 3 percent to GDP growth in Sub-Saharan Africa. China invested heavily in infrastructure, which has underpinned its economic growth. China has also invested in higher education and skills development. Africa could learn from China on this issue. Africa could also learn from China the symbiotic relationship between the government and private sector. In a developing country, these two sectors should find natural partnership, especially around infrastructure investment and in creating an enabling environment.

What should Africa be doing to combat the global economic crisis and what economic challenges lay ahead?

In order to combat the global economic crisis, Africa should focus on economic growth, which should be strong, sustained and shared. Growth is a powerful channel for poverty-reduction. Such economic growth requires supporting "pillars" such as flexible macroeconomic policies which are pro-growth; infrastructure investment; private sector promotion and support; human capital investment skills development; promotion of intra-Africa investment and trade; promotion of South-South economic relations with countries such as China, India, Brazil, South Africa, etc., as these countries hold the bulk of the global capital surpluses; and finally knowledge-sharing. Focusing on the "pillars" will enable African economies to grow.

(ChinAfricaVOL.3 February 2011)

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