CHINA AND AFRICA

AFRICA, CHINA AND GETTING BEYOND RESOURCES

China RealTime Report, September 13, 2010

China’s growing relationship with Africa is a crucial topic for Mthuli Ncube, the recently-appointed chief economist of the African Development Bank. The Wall Street Journal caught up with him at the World Economic Forum meeting in Tianjin, China, and asked for his assessment of how trade with China is changing a continent of a billion people. Here are some edited excerpts from the interview:

What impact has trade with China had on Africa’s own manufacturing sector?

Ncube: Initially I was concerned, because China imports only oil and resources from Africa, and Africa imports back equipment and machinery and cheap goods. So that’s a problem in that it destroys manufacturing. But if Chinese companies are now investing in factories in Africa, they are creating jobs. They are manufacturing for the local market but also for the export market, and those revenues do come back to the country in taxes. That’s positive.

The trick is really for African governments and policymakers to realize that these new Chinese investors ought to partner with local entrepreneurs. They should use it to leverage the development and growth of local entrepreneurship. To me, that is the key. If they can crack that, I think it is really, really positive, absolutely.

They [Chinese companies] are operating in isolation, and you need integration. You need joint ventures. If we’re going to give you land for industrial parks, you must partner with local entrepreneurs. It’s never a good thing to go into a country and create an enclave for yourself. There’s always pushback. Once you are very successful, there’s political pushback, unfortunately. So you’re buying insurance through doing JVs. I think companies from the U.S. and U.K. did that when they came to China. It’s very similar.

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