World Bank Head Robert Zoellick was in China last week discussing approaches to development, and how China’s economy might continue to grow, offering lessons for other growing regions. On this visit Zoellick also spoke about China’s potential to stimulate manufacturing industries in Africa. This has been a long standing interest for China Africa News, especially in the possible cooperation between the World Bank and Beijing to facilitate the shift. The announcement was first made early last year, and in the recent visit Zoellick cautioned that plans were in very early stages.
As China’s relationship with the African continent matures we are witnessing ever closer integration of economies, and changes in how China operates. The principle of non intervention is under serious pressure, especially in Libya where the military support offered by Britain and France to rebel groups appears to have won them favour with the new government in the inevitable competition for resource contracts which will accompany a new government. China is trying to walk a difficult line between its obligations as part of the international community (and the potential resource deals they apparently bring), and its reputation among developing countries as a champion of the little guy. This article from Ghana was interesting in its portrayal of China’s position vis-a-vis Africa.
Last week emerging market specialist Frontier Advisory announced results of research suggesting that 92% of Africa’s growth is directly correlated with growth of the Chinese economy, rather than structural or political improvements. At the moment this is mostly captured by demand for resources, which is why the World Bank should be helping China to transfer manufacturing jobs to Africa under a Chinese franchise, wherever possible. China’s role in Africa has much greater positive development potential than simply driving up primary resource prices.
Examples of Chinese job creating manufacturing ventures are increasingly frequent in the weekly press. Last week it was announced that a pipe mill to be set up in Nigeria by Jiangsu Yulong Steel Pipe Company of China will employ at least 5,000 people directly and indirectly when it begins production.
Finally research from Standard Bank last week posited that the steady internationalisation of China’s renminbi will see at least 40%, or $100-billion, of China’s trade with Africa being made using the currency unit by 2015. This is certainly a signpost to China’s increasing opening to the world and African economy, but should not be considered a harbinger for a new world reserve currency.