Hello, welcome to visit Shanghai Forum
First I would like to express myappreciation that Shanghai Forum has built up a platform for the idea exchangesbetween Asia and the world, and I’m very glad that this year, 2017, ShanghaiForum has taken Africa as an account—I hope this will be a continuing agenda inthe coming years. I would like to thank Fudan University, Korean Foundation forAdvanced Studies and Fudan Development Institute for giving me the privilege tobe a speaker at this important forum and I would like to thank thedistinguished speakers who are able to share their perspectives.
My focus will be on cooperation andeconomic ties between Asia and Africa, with China and Africa at the center ofit. As we may all know, there are two perspectives on this important andcritical subject. One is what may be called the Eurocentric perspective, whichtries to portray the Africa-China cooperation as neocolonialism. The secondperspective is an African perspective or alternative perspective that viewsthis cooperation that it can contribute to the economic transformation ofAfrica, as well as it can bring a win-win advantage to China and bring a muchbetter world to everyone. So I will try to dwell on these issues.
My focus will be on three importantpoints. One would be on exploring the China-Africa cooperation under broaderframework and I will try to hint the context, the dynamics and the content ofthis cooperation, and also the achievement and the constraints so far. On thesecond point, I would like to demonstrate how Ethiopia is the pioneer of thisChina-Africa cooperation and the gateway to Africa, and has been able toachieve economic transformation as realized to build productive cooperationbetween China and Africa. The last one would be a conclusive perspective thatwill focus on the pathways to the 21st century and in order such cooperation tobe sustainable and beneficial; it has to bring advantages to Africa, to China,as well as the broader world.
First, we need to understand that theChina-Africa cooperation has been able to be implemented and designed at a timewhen the global economy is stagnant, specifically after 2007 and 2008 financialcrisis and we also need to understand that we are in a very interconnectedworld and whatever happens in one part of the globe will definitely affect theremaining parts of the world in terms of economic dynamism and technologicalspillover issues, even related with migration, health and terrorism. So withthis interconnected world, every advantage and strength we build willdefinitely have a much broader impact on the remaining part of the world. Wealso need to understand the globalization, which has brought great prosperityto millions of people and also has brought from poverty hundreds of millionsand has created a great wealth. We also need to understand that it has widenedinequality and it has also brought marginalization of some regions and this hasbrought some frustration and disappointment in particular the youth, so it’svery important that we try to contain or remedy the side effects of globalization.
The other context we need to understandis that China has set exemplary advancement in terms of poverty reduction,bringing about 700 million out of poverty and it has also shown us that acountry can advance and catch up in few decades. As we all know, theforerunners, including the US and Japan, have taken much longer years anddecades while China has been able to achieve quite successful catchup in thelast four decades.
And we also recognize that China is amanufacturing powerhouse, contributing to 25% of global manufacturing, whichwill have a significant impact on Africa as well and has become the secondlargest global power and economy, and we believe it will have a significantimpact on shaping the future.
Although developments of many parts ofAfrica was pessimistic but Africa has made substantial progress in the last twodecades. First, we have to recognize this is a continent with 1.2 billion andexpected to be 2 billion by 2050. Currently, out of every six humanity, one isan African and we cannot neglect this continent. It’s also a continent withabout 800 active workforce and with a growing middle income and it has abouthalf a billion-consumer market. And increasingly, in the last two or threedecades, Africa has become much more stable and has reduced conflicts incomparison with earlier time. In the last 15 years, Africa has been able toachieve about 5% GDP growth on average and in comparison to the othercontinents, except Asia, this has been considered as a moderate growth.
Having said this, the China-Africaneconomic ties are based on two major pillars. One pillar is the Belt and RoadInitiative and this has been primarily officially public by President Xi in2013. The Belt and Road Initiative that links Africa is the Maritime Silk Road,as we all know, but the more important pillar of the China- Africa cooperationis the establishment of FOCAC or the Africa-China Cooperation Platform, whichhas now been conducted for the sixth time in Johannesburg in 2015 and duringthis period, there has been substantial growth and dynamics happening in Africaand in this cooperation as well.
I would like to share some figures. Inorder to weigh the effectiveness of this cooperation, first, we have to look attrade. We have to look at infrastructure development and we also have to lookat investment. In terms of trade, in 1980, China and Africa were only havingtrade relations amounting to $1 billion and in year 2000, it increased to 10billion and in 2013, it has increased to 225 billion. It has been increasingand growing by 21% every year and between year 2000 when FOCAC was establishedand 2013, trade has increased by 20 times. This is a significant growth andcurrently, China is the largest trading partner of Africa.
This is quite a significant achievementbut we also see some major imbalances. For instance, Africa contributes 5% oftrade with China while it’s 16% for Africa so there is a trade imbalance, whichwe need to narrow down. Most of the products exported from Africa are primarilyoil and mineral products, which are not processed and in the long term, this isnot going to help the continent and others in this concern will be quitesignificant. The volume needs to be increased and also to be diversified and tobe value-added, but it has been quite significant and should be considered assignificant progress. If we look at this volume, the additional dimension wemay need is the second largest trading partner of Africa is India and thevolume of India-Africa trade is only 60 billion so the difference between Indiaand China is close to 120 billion.
The second aspect we may look at isinfrastructure. First, we need to understand that infrastructure hassignificant impact on poverty reduction, on narrowing inequality and improvinginclusiveness. We also need to understand that an economy, to be competitive,must be supported by infrastructure. If we look at the two large countries,India and China, one of the key difference is the investment in infrastructure,which will have a significant impact on the competitiveness of the economy.Having said this, infrastructure has been an area where China has significantlycontributed to Africa. Currently, China is the largest financier ofinfrastructure in Africa and its companies are the largest contractors. We needto understand that this increment in infrastructure will have a significantimpact on the economy.
On the third aspect, on investment, FDIoutflow to Africa has increased in the last two decades and currently, it hasbeen No.4 in year 2014, next to UK, US and France in terms of investment stockbut it’s expected according to latest McKinsey study that by 2020, it’s goingto be the largest FDI source.
And here, we also see that there isunevenness among many African countries who engage with China. To brieflyhighlight, Ethiopia has been a pioneer in engaging with China and the keyaspect of this has been that Ethiopia has been showing the fastest economicgrowth in the continent, about 11%, for the last 14 years without resource boomor without any growth in mineral or oil industry and Ethiopia has also beenengaging with China in qualitative way and one key aspect of this cooperationis for instance, the FDI flow to Ethiopia from China is primarily inmanufacturing. 66% of China FDI in Ethiopia is in manufacturing, whilst onaverage in Africa, it’s about 25 to 30%, so Ethiopia’s basic approach toeconomic transformation has really helped to shape the cooperation betweenChina and Ethiopia in a way to sustain its economic growth. Infrastructure hasbeen the major focus of Ethiopia and we had invested billions even from our ownresources and we are building energy railway lines, transportationinfrastructure and we have been expanding universities and technical schoolsand recently, we have focused on expansion of industrial parks.
So the key lesson here is that anAfrican country, to benefit from the cooperation between China and
respective country, needs to have solideconomic transformation agenda and here, China can play a positive role and fora partnership to be quite successful, an active engagement on both sides isquite important.
Lastly, I would like to mention thatthe China-Ethiopia cooperation has covered, for instance, the construction ofrailway line from Addis Ababa to Djibouti. It’s electric-powered. It’s 120kilometers. It’s one of the most modern in the continent. In terms of energy,we have basically focused on clean energy and renewable energy, involving windfarms, involving hydropower and we want to build on it so sustainability isquite important. In terms of infrastructure programs, the way that we havetried to do is that we focused on quality infrastructure. We tried to pushChinese companies to deliver on time and also to benefit from value for moneyand the infrastructure programs in Ethiopia usually took quite short time. Webuilt parks in 9 months or 12 months. We completed railway lines in 3 to 4years and this has really helped us to benefit from the resources.
Ethiopian Airlines is one of theleading airlines globally and it has also played an important role in buildingthe connectivity between China and Africa. It’s an airline flying to manycities in China and it has become a major bridge. This has also helped Ethiopiato develop as aviation hub and we believe this is an important bridge betweenboth countries.
Having said this, I would like toconclude on a few points. First, in order to sustain the growth and to shapethe future of China-Africa cooperation, first, every African country shouldfocus on economic transformation. It has to diversify from specific industry.We have seen that with the fall of commodity prices, many oil-producing Africancountries have suffered from lack of diversification so having an economictransformation agenda is a condition for making these programs quitesuccessful.
The second aspect that we need to focuson is that we shouldn’t see China as a source of resources. Ethiopia mobilizesresources from Eurobond, from Credit Suisse, from many European banks, fromWorld Bank. For us, the key point is African countries should also look atChina in terms of policy learning. China is a nation that has been able toreduce poverty in hundreds of millions and African countries can learn fromthis. China has also a unique policy approach and Ethiopia has benefited bylearning on this policy approach. Experimenting and piloting is one of theunique practices in China. Learning the truth from facts is one of the keyapproaches in China. In terms of industrial policy also, many African countriescan learn, so we believe the policy learning is a key dimension that Africancountries should really consider. Developing the domestic linkage in terms oftalent, local talent, management skills and domestic industrialization is alsoquite important.
The second pillar must be based onvalues and principles, and the reason that we don’t say this is aneocolonialism is that we have seen African countries being pressured by formercolonial powers even until recently and the basis of partnership between Chinaand Africa has been based on a peaceful coexistence, on non-interference indomestic agendas, on mutual respect, on win-win agendas. This is very, veryimportant. Africa has experienced the conditionality agenda of the World Bank,IMF and many of its donors and partners, and African countries should be ableto sit on driver’s seat and there should not be any interference in their localpolitics or domestic politics, be it in terms of building democracy orrespecting human rights. Democracy and human rights are built domestically andnot transfused from external powers. So the cooperation has been based onvalues and principles which are central to UN Charter. Peaceful coexistence,non-interference, mutual respect are the key blocks of United Nations Charterand we believe China should continue to be committed to this and China alsoshould promote these values and principles in G20 Summit and internationalplatform.
We also believe that all thiscooperation will help Europe, as well as other advanced economies. The majorconcern of Europe is migration, which can be under control by Africa if jobsare created in Africa. The economic dynamism in Africa would improveconsequently, which would definitely help to reduce, to contain terrorism, tofight terrorism, to build a more stable world and also to improve thelivelihood of the poor, wherever they are. So these are the key pillars thatshould be considered in sustaining the China-Africa cooperation and making thiscooperation contribute also to global and world well-being. And here the keyissue is, in 21st century Africans are determined to make sure the century willhelp Africa to catch up, and we believe the next frontier will be Africa.
(This article is edited based on therecording and has not been reviewed by the speaker.)
