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A place for Africa on new Silk Road

Updated: 2015-05-24 14:39
By Liu Naiya (China Daily Africa)

Transfers of China's overcapacity industries and their technology should be a key part of One Belt, One Road

Recently, Chinese academia and media have engaged in a heated discussion over the government's One Belt, One Road initiative and the Asian Infrastructure Investment Bank.

Naturally, the relevance of China's new Silk Road revival plan to Africa also has become a significant topic of conversation among Chinese Africanists.

It is clear that the African continent should not perfunctorily be labeled as a major part of the overall strategy. However, it is equally important to transfer to Africa those Chinese industries straining under a burden of overcapacity, which is also a strategically beneficial plan for both sides.

Overcapacity haunts many Chinese industries, including iron and steel, coal and cement. This is still a serious burden to their future development even after structural reforms and upgrades. Encouraging their move will greatly facilitate the transfer process.

This is also one of the goals of the One Belt, One Road initiative, which refers to the China-led Silk Road Economic Belt and 21st Century Maritime Silk Road, ideas that are inspired by ancient trade routes and based on infrastructure, trade and other measures. But these transfers are not only a regional initiative and arrangement, but also a global demand.

In terms of how and where to transfer them, it depends on individual cases. But it must be noted that Africa is strategically related to the plan based on its rich and cheap labor resources, relatively rational natural resource allocation, as well as its huge population and market volume. (It is predicted that the African population will exceed 2 billion by 2063.)

The huge population dividend and potential for economic growth would give Africa a significant role in the plan. As noted by Justin Yifu Lin, the former chief economist of the World Bank who has visited Africa many times, Africa is important to China's One Belt, One Road initiative and should be incorporated into it.

Another impetus for this massive industry transfer comes from Africa, where there are urgent demands for industrialization in the next 50 years. From a developmental perspective, Chinese industrial transfers to Africa are in line with Africa's industrialization trends and the desires of African nations themselves.

Industrialization is almost always a significant stage in any country's modernization. Africa during the past few years has produced an economic growth miracle amid a world economic recession. Its average growth has exceeded 5 percent, higher than average global growth.

Many countries, including Ethiopia, Tanzania and Nigeria, have made remarkable development gains. Ethiopia, a country with fewer natural resources, has had double-digit growth during the past 10 years. International organizations, including the United Nations Economic Commission for Africa, the African Union and the African Development Bank, have joined hands with many regional organizations, such as the East African Community and the Economic Community of West African States, to draw up development proposals for the next 50 years, in which they propose advancing industrialization by strengthening infrastructure construction.

Also, Egypt and South Africa - two influential countries in Africa - have successfully made their bid to become founding members of the Asian Infrastructure Investment Bank. This no doubt indicates they will make the best use of the bank and of China, a major player in this initiative, to develop their industries that have long been waiting for takeoff. It also will provide an example to other African countries.

There are unique features to the China-Africa relationship among contemporary multilateral relationships. The uniqueness of this relationship, as pointed out by academics, is a solid proof of the deepening partnership between two sides.

At least to China, this has become the most important set of multilateral and bilateral relationships in the world. It is supported by the Forum on China-Africa Cooperation, which has sub-institutions to support mutual engagement, including the China-Africa Development Fund and a special fund for China-Africa small to medium-sized enterprise development.

As a tradition, China's foreign minister always chooses Africa as his or her first travel destination in the first lunar month of the year, which reflects the importance the government attaches to these ties. China's investments and trade will undoubtedly keep increasing, and the bilateral relationship will be further consolidated.

Promoting the transfer of industries from China is a critical measure for the One Belt, One Road plan. The implementation of the plan and industry transfers complement each other, or at least they are not contradictory.

But key questions remain: Will the Chinese government make industrial transfers to Africa a government priority as it did with the One Belt, One Road plan? Also, will parties be able to benefit from the $40 billion Silk Road infrastructure fund and privileged policies during industry transfers?

The author is a professor at the Chinese Academy of Social Sciences.

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