Kenya’s economic and trade relationship with China is beneficial

China is currently Kenya’s most important development partner. It has made significant contributions to our country’s development by partnering and offering much needed support in various sectors of our economy. Our friendship and cooperation has grown exponentially over the last decade making great achievements in the fields of economy, trade and investment.

China has impressively implemented projects that aim to give Kenya a strong development foundation and ensure economic sustainability. Its companies have played a leading role in infrastructure development in transportation, communication and energy sectors.

Notable completed projects include the Thika Superhighway, the new Unit 4 Passenger Terminal at Jomo Kenyatta International Airport, and Berth No.19 at the port of Mombasa. They have also drilled 26 steam production wells at Olkaria and implemented 2 projects for constructing power transmission lines and substations.

Besides, Chinese companies have signed new contracts for the construction of upcoming large scale projects such as Mombasa-Nairobi standard gauge railway, high grand falls dam project, the Greenfield passenger terminal complex and associated works at JKIA. All these projects are aimed at improving the Kenyan economy.

Apart from project contracting in infrastructure, investment in business is a more constructive way to achieve common development on a much larger scale. By the end of 2012, China’s contractual investment in Kenya was 470 million USD and the actual investment was 379 million USD.

The investment covers real estate development, vehicle assembly, household electrical appliances, light industry, building materials, resource survey and exploration, food and beverages, tourism etc. Last year, China became the second largest source of foreign direct investment in Kenya.

As a result, the trend of Chinese manufacturers moving into Kenya brought with it innumerable employment and innovation opportunities for the ever-growing Kenyan human capital. Estimates reveal that local employees take upto 80% to 90% of staff hired by Chinese companies.

The bilateral trade volume between China and Kenya hit a record 2.841 billion USD in 2012; a 16.7% increase compared to 2011. Our trade volume has continued to increase at an annual rate of 30 percent since 2010.

Although there is a trade imbalance, China has been taking measures to boost and accommodate an increasing number of Kenyan imports. They have removed tariff barriers for some of our imports into China and have been keen to extend tariff exemption initiatives.

China’s imports from Kenya include key agricultural products such as leather, plant cellulose products, coffee, black tea, and so on. This is definitely a move aimed at leveling the playing field for our bilateral trade.

There has also been a shift in the content of Chinese exports to our country. Apart from cracking down on counterfeit and low quality products to Kenya, China is trying to move away from light industrial goods and is focusing on the exports of machinery, transport equipment for agriculture and industrial production, the service sector  and technology that Kenya urgently needs. This is a significant opportunity for our country to access advanced technology and machinery is vital if we are to meet our economic and social development goals.

The Chinese government is now urging its manufacturers and industries to shift bases and establish their industries here in Kenya to boost our industrial capacity and access the wider east African region. Kenya is a regional trade and economic hub and therefore, a strategic destination for Chinese industries and businesses wishing to expand and access the wider regional market.

Several Chinese manufacturers are already setting up local production plants in Kenya, shifting from the previous strategy in which they supplied the domestic consumer market with goods imported from their home country. This will increase the export capacity of Kenya to China and other regions. It also presents an opportunity for skills transfer and possibility of upgrading our local enterprises.

Besides manufacturing, China is now laying emphasis on the opportunities in the Tourism and Agricultural sectors. The growth of service sectors such as tourism and emphasis on Kenya’s comparative advantage would greatly help reduce the trade imbalance with China.

China has provided landing rights to Kenya Airways in several cities in China and is now operating direct flights to Hong Kong (China) and Guangzhou in southern China from Nairobi. In addition to this, Kenya was granted Preferred Tourist Destination in 2004, doubling tourist arrivals from China.

Such initiatives boost the Kenyan economy by enhancing not just the earnings of the Airlines but also earnings for the tourism and agricultural sectors which are the leading foreign exchange earners for Kenya. They have facilitated the movement of tourists from China as well as agricultural products from Kenya.

To further boost tourism, CCTV, the largest television channel in China, recorded a documentary of the landscape and beautiful scenery of Kenya and its magnificent wildlife. The documentary titled “Glamorous Kenya” was aired every day in China on CCTV documentary channel 9 and the effects were amazing. Tourist arrivals from China rose sharply from only 28, 000 in 2011 to over 45,000 in the year 2012.

China and Kenya have enjoyed a mutually beneficial relationship since the establishment of diplomatic relations 50 years ago. There is no doubt that we have benefited greatly from this friendship and cooperation. Our two countries should continue to cooperate with each other with an aim of enhancing our mutual development and elevate our friendship to achieve our development goals.