Africa must raise quality of trade with China: WEF

Trade between China and Africa must move beyond Chinese hunger for commodities and an influx of cheap imports into Africa, the world’s poorest continent, World Economic Forum delegates urged on Friday.

“We can’t live forever on the basis of a mineral boom. We have to consolidate that into value added production,” South African Trade Minister Rob Davies told at session at the 21st WEF on Africa.

“The building of the domestic market and consumer industries is fundamental if we’re going to move further forward. We cannot live on just a mineral boom and a growing market which is serviced by imports. We have to occupy that productive space as African countries.”

Sino-African ties needed to shift from a relationship characterised by raw African exports to Beijing, and an influx of Chinese products to all corners of the continent, to one that added to industrial activities on the continent.

“The relationship is at a point where we shouldn’t just be conceding of a quantitative expansion of what we have already,” said Davies, who said China had provided “fantastic opportunities” to Africa.

“But also how we are going to make some qualitative shifts so that the partnership with China begins to contribute to much more value added activities on the continent. I believe that really its up to Africa to be much more active in trying to set the terms of that new relationship.”

Africa’s rich natural resources have been snapped up by China to fuel its massive economic growth with minerals the biggest exports to Beijing while the continent’s major imports from China are mechanical or electrical products.

Liu Guijin, African Affairs special representative in China’s foreign ministry, said Beijing would do more to promote industrialisation and invest more.

“The structure or composition of China Africa trade relationship is not that desirable in our view at the moment. But that is something not unique with China,” he said, citing African trade with the United States, European Union and Japan.

There was a need for the developed world, China and African countries to work together to diversify the structure of the trade and the economy of the continent and African countries should also harness China’s interest in the continent.

“The African governments need to use properly the revenues from the commodities to diversify their economic structure,” he added.

Trade between China and Africa surged 43.5 percent year on year in the first 11 months of 2010.

Beijing became Africa’s largest trade partner in 2009 and has poured money into the continent that has been criticised for support for unsavoury governments such as in Sudan but lauded for bringing sorely needed infrastructure.

China’s resource demands had been the main driver Africa’s strong growth and not the continent’s economic policies or more agile economic planning and delivery, said Martyn Davies of consultancy Frontier Advisory.

“It’s more been driven by external factors in China,” he said.

China had been on a stimulus package style spending for the past two decades and fixed asset investment spend had driven Beijing’s growth and trade with Africa and demand for resources.

“If it starts to cool off which it will, China’s growth this year will drop off a couple of percentage points. We shouldn’t overact to it,” he said.

“But I think we should not to become too drunk on growth in Africa because the enabler — that is decisions made in Beijing — will not last forever.”