Opinion / Op-Ed Contributors

Industry transfer to Africa good for all

By Justin Yifu Lin (China Daily) Updated: 2015-01-20 08:03

Industry transfer to Africa good for all

Kenyan Vice-President William Ruto (right) and Tian Lin (center), charge d'affaires of the Chinese Embassy in Kenya, at the groundbreaking ceremony for the Sino-Africa Joint Research Center at the Jomo Kenyatta University of Agriculture and Technology in Nairobi, Dec 4. Xinhua

The core of the "One Belt and One Road" initiative, the creation of a Silk Road Economic Belt and 21st Century Maritime Silk Road, is infrastructure construction. China should also include Africa in the initiative and encourage the transfer of its labor-intensive industries to Africa.

This strategy would provide developing countries with a development boost and benefit China as well. Chinese enterprises must improve their quality, and the government can set up a foreign development cooperation department to coordinate the works of relevant ministries.

In 2009, the developed countries needed structural reform to recover from the financial crisis. But the reforms met considerable political resistance, as they would reduce consumption and expand unemployment. Conventional solutions, such as depreciating the currency and implementing an assistance plan, were of no use in overcoming that crisis. Therefore, increased investment on infrastructure construction by both developed and developing countries was the best option for not only boosting the growth of the investor countries, but also stimulating the exports of the other countries.

Developed countries' infrastructure needs renovation and improvement, and developing countries' infrastructure is mostly poor. It is more advisable for China to invest its foreign exchange reserves, which have mainly been spent on buying government bonds, on infrastructure construction. The returns will be higher.

At the G20 summit in Seoul in 2010, helping developing countries' infrastructure construction was listed as the first consensus of the meeting. China's "One Belt and One Road" initiative can now set a good example for the world.

The strategy is good for the stabilization and development of the world economy and China, as it has a large overcapacity in construction materials. The strategy can also improve the return ratio of China's huge foreign exchange reserves, promote export growth and make good use of the resources of developing countries.

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