Friday, May 6, 2016

Guest Post: Report from Yiwu: Made in Africa, By China?

Photo credit: Yunnan Chen
This guest post is by SAIS Ph.D. student Yunnan Chen, who recently attended the fifth China Africa Think Tank Forum, held this year in the city of Yiwu, Zhejiang: 

The forum, organized by Zhejiang Normal University with the support of the Ministry of Foreign Affairs (MOFA), China Development Bank (CDB), and, this year, the Yiwu Municipal Government, brought together representatives from these institutions, Chinese and international scholars, officials from African embassies, and representatives from the Chinese and African business communities, to discuss the theme of African industrialization—and the role of Chinese policy and investment.

The forum served as a follow up from the 6th Forum on China Africa Cooperation (FOCAC) held in Johannesburg in late 2015, where Xi Jinping pledged $60bn USD of finance for Africa, some of which would be channelled into fostering African industry—continuing to build and transform the China-Africa commercial relationship. Representatives from Yiwu were also keen to showcase the city’s brand as the small commodities capital of China (and therefore the world). Tying into this broader theme, our recently published SAIS-CARI working paper, “Learning from China? Manufacturing Investment and Technology Transfer in Nigeria”, was one of many presentations and talks discussing aspects of China-Africa cooperation in industry. A number of themes emerged at the Forum:

Structural transformation and opportunities to industrialize: Ethiopia and Rwanda came up again and again:  their representatives highlighted the key role that China was playing in their industrial sectors. H.E. Arkebe Oqubay, the economic advisor to the PM of Ethiopia, outlined the growing importance of manufacturing to Ethiopia’s structural transformation and China’s role as a model, as well as a source of FDI. Many emphasized the critical timing: Helen Hai, the CEO of Made in Africa and UNIDO Goodwill Ambassador, told her story of leading the successful entry of Chinese shoe factories into Ethiopia, positing that as China’s economy restructures away from manufacturing, Africa can capture some of the these 85m labor-intensive jobs that will need to relocate.

Infrastructure development and regional integration: A number of speakers, including Charles Kayonda, the Rwandan ambassador to China, discussed the need for infrastructure “corridors” and regional integration, noting that China is already actively building telecommunications and railway networks. Lin Songtian, director of African Affairs at MOFA, promised further cooperation with key partners including Egypt, Angola, Ethiopia, Kenya, and Tanzania, among others, in the construction of “industrial corridors” and “demonstration sites.”

China as a responsible partner: Whilst most participants were relentlessly positive on the outcomes of China-Africa cooperation, some also addressed the flip side of China’s African engagement. MOFA’s Lin Songtian emphasized the need for a more responsible approach to debt sustainability and the financial burdens created by Chinese loans. He also acknowledged that Chinese companies need to respect local laws. One interesting presentation from a Chinese risk management firm discussed some of the growing security issues that Chinese enterprises faced abroad, and his company’s role in addressing these, indicating a growing awareness (and demand) from Chinese businesses for information and insurance in going out. (He dryly described much of their work as “wiping bottoms”, i.e. clearing up messes that Chinese themselves had caused.)

Human capital and soft infrastructure: Hard infrastructure is not enough—a number of Chinese and African participants voiced the need for greater investment in human capital, a means for Chinese firms to ‘give back’ to local communities. As one Chinese firm, Touchroad International, argued, localization would be a necessary trend for Chinese firms going abroad, using the firm’s activities in Djibouti as an example of emerging Chinese Corporate Social Responsibility (CSR). Takyiwaa Manuh, director of the UN Economic Commission for Africa (UNECA), commented that Chinese firms needed to do more in technical education and training initiatives (such as agricultural training and other vocational centres) as part of the necessary soft infrastructure to support economic modernization and industrialization.

Policy alignment between China and Africa: at the policy level, H.E. Liu Guijin, former ambassador and currently dean at Zhejiang Normal University, argued the need to align the AU’s Agenda 2063 with China’s Five Year Plans—to embed China into African development strategies. Representatives of the host city of Yiwu also stressed the significance of the Belt and Road policy, for Africa, and for Yiwu city itself, which portrayed itself as the final link of the Belt and Road in China. Commenters such as CDB’s Xu Yingqiu emphasised that places like Yiwu could play a role in integrating Africa into these global supply chains. Still, there is not a little irony for a city like Yiwu—as a trading hub and capital of small commodities and wholesale—to be championing African manufacturing and industry that would compete against the types of light manufacturing goods that the city currently exports.

Though the forum was a rather grandiose--as the photo shows--means for China, and Yiwu in particular, to showcase its achievements and reinforce the positive political message of China-Africa cooperation at the elite level, the wider inclusion of business representatives and emphasis on commercial engagement indicates a growing significance for firm-level initiatives and firm-level responsibility in the evolving China-Africa economic relationship.

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