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by Ismail Akwei, at 01:00 pm, November 05, 2018, Money Moves

African leaders convinced of balanced trade as China moves to open its markets

Kenyan President Uhuru Kenyatta and Chinese President Xi Jinping

Fears of China’s neo-colonialism in Africa has been met with fierce rebuttal and counter-arguments despite the Asian economic giant’s infiltration of Africa’s media space, land and airspace as well as the economic and cultural fabric of the continent’s societies.

Trade is the underlying factor in the China-Africa relationship and the latter is drowning in unpaid loans as a result of unfavourable agreements that is placing African citizens in limbo and their future in harm’s way.

Many countries have defaulted in payment of loans that have been exchanged with natural resources and unadulterated access to local markets while a few others are slowly paying through debt servicing.

In the 2018 loan data published by the China-Africa Research Initiative (CARI) at the Johns Hopkins University’s School of Advanced International Studies (SAIS), from 2000 to 2017, the Chinese government and institutions extended $143 billion in loans to African governments and state-owned enterprises.

The top beneficiary was Angola which received $42.8 billion over 17 years; and according to the research findings, China is not Africa’s largest donor, but the United States.

African leaders have on several occasions expressed the need for China’s support which comes also in the form of infrastructural development. China has also expressed unreserved sentiments towards the blame heaped at the communist state of overburdening the continent with loans as a strategy for a take-over to become the most powerful in the world.

“It is baseless to shift the blame onto China for these African countries debt problems. Their debt position has been built over time even before we came in … We have to look at the fluctuations in the international economic situation vis-a-vis the price of minerals, their key exports. This is where the problem is, and not Chinese loans,” China’s special envoy to Africa, Xu Jinghu, said in September denying claims that Beijing was burdening Africa with debt.

However, Kenya’s president Uhuru Kenyatta nearly sparked a trade war with China after he instructed the ultimate protection of local fish traders from an influx of cheap imported Chinese fish. Kenyan officials immediately imposed an importation ban on Chinese Tilapia which sells at about Sh250 ($2.46) per kilogram in the local market against the local Tilapia which sells at Sh400 ($3.94) per kilogram.

“How can we be buying fish from China? Even if the Finance Bill has already been adopted you can think outside the box and say the fish is spoilt when it arrives at the port of entry … There’re many ways the government can work to ensure its people benefit if we really intent on serving our people,” Kenyatta said last month.

Kenya’s State Department for Fisheries, Aquaculture and The Blue Economy announced plans to ban Chinese fish imports from January 1, 2019. This received a quick threat from the Acting Chinese Ambassador Li Xuhang who said it was “unfair” and could result in a “trade war”.

He later denounced the threat and called for unfair trade policies saying: “We expect the participating Kenyan enterprises at the upcoming China International Import Expo in Shanghai, to take advantage of this opportunity to let Kenyan products be recognised by the Chinese market, thus opening a door to more Kenyan products.”

Li Xuhang’s call was followed by the participation of Uhuru Kenyatta at the maiden China International Import Expo (CIIE) fair in Shanghai which was opened by Chinese President Xi Jinping on Monday.

Kenyatta led a delegation of Kenyan traders to the fair where a deal on horticultural exports is expected to be signed to open up the Chinese market to over 40 per cent of the country’s fresh produce including avocados, cashew nuts, and mangoes, reports local media.

The agreement also includes the establishment of a working group on trade tariffs in a bid to promote fair and balanced trade between the two nations.

Chinese president Jinping said the fair is “a major policy for China to push for a new round of high-level opening-up and a major measure for China to take the initiative to open its market to the world.”

“All countries should be committed to opening up and oppose protectionism and unilateralism in a clear-cut stand,” he added during his keynote speech at the opening ceremony.

A total of 172 countries, regions and international organizations from five continents are at the fair to showcase their products to the Chinese market which President Jinping is promising to open for the benefit of other countries including those in Africa.

Kenya is one of the biggest beneficiaries of Chinese loans and its local market like those of other African countries are facing a large influx of cheap Chinese produce and exports which are killing local businesses.

Meanwhile, Rwandan President Paul Kagame has reiterated his backing of the Chinese support offered to Africa. He has stated categorically that the support should benefit his people who are his topmost priority.

Ahead of the fair, Paul Kagame launched Africa’s first Electronic World Trade Platform (eWTP) with the help of Chinese multinational technology conglomerate and the world’s largest e-commerce platform operator Alibaba Group to engage small businesses in electronic cross-border trade.

“Rwandan producers will be able to sell directly to a much larger set of customers than before, while bypassing costly intermediaries. This improves productivity and profitability. There really are no downsides to doing business on a global scale,” Kagame said recently at the launch in Kigali.

He added that Rwanda values its relationship with the Chinese private sector and focuses on mutual benefit to improve productivity and profitability for Rwandans.

“Let me reiterate that Rwanda greatly values our growing relationship with the Chinese private sector and Alibaba Group in particular. The product being launched today is a tangible example of that, and one that we intend to build on for mutual benefit.”

Co-founder and executive chairman of Alibaba Group, Jack Ma, attempted to demystify the popular notion that China is taking over Africa.

“In the future, it will be “Made in Internet”, not “Made in China”. We have to prepare. Complaining doesn’t solve anything, let’s build a system that supports developing countries and young people,” said the Chinese business magnate.

Alibaba will support Rwanda’s economic development by working with the Rwanda Development Board (RDB) to help Rwandan SMEs sell their products, including coffee and handcrafts, to the more than half a billion Chinese consumers through Alibaba’s online marketplaces while facilitating tourism to Rwanda and providing capacity building to empower the growth of Rwanda’s digital economy.

Not all African countries have demanded trade balance from China as Kenya and Rwanda have done. Sierra Leone recently cancelled all contracts with a Chinese construction firm that was tasked to build a new $318 million airport facility in March.

It said it was “uneconomical to proceed with the construction of a new airport when the existing one is grossly underutilized”. It is about time African leaders rethink the loan and trade agreements signed with China and other foreign states to ensure the beneficiaries are the citizens and not the other way around.

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