Chinese Companies have a positive Influence on Kenya’s Economy

Chinese companies and businesses have become more visible in Kenya and are making an even greater impact on the country’s economy than most of us can comprehend. China’s investment in trade with the country is steadily rising and Chinese goods are flooding the Kenyan market, as they are doing in the rest of the world.

The enormous volume of the two-way trade between China and Kenya has inevitably caused some problems. Local traders are facing stiff competition from Chinese investors who they accuse of selling their goods at cheaper prices and driving them out of business. However, we need to interrogate how the Chinese investors and traders thrive above us and are able to sell cheaply and still make profits. Nonetheless, these challenges cannot outweigh the positive impact that Chinese companies and businesses have had in the country.

There seems to be a constant attempt to portray China’s expansion in Kenya and the rest of Africa as a threat to our economy and a case of economic domination. There is also the notion that Chinese investment is predominantly in natural resources. However, the truth is that this is a win-win situation where each party gets the best of what it bargained for.

What creates fear for Chinese companies and businesses is that they have the numbers, technology and innovations. But these are the exact attributes that our country needs for our economic take off. Investors should create jobs and probably add value by bringing in the kind of skills that we still don’t have in our country. Therefore, Kenyans should fairly compete with their Chinese counterparts and learn from them and together drive the Kenyan economy to greater heights.

As China’s relationship with Kenya shifts from being essentially government to government cooperation to business to business cooperation, enormous potential has been seen in the manufacturing industry, retail in Chinese products and ICT sectors. Chinese companies are increasing their investment in other sectors, such as food processing, the service industry and telecommunications and ICT.

More and more Chinese companies and businesses are looking at Kenya as a new destination for investment, trade harbor and manufacturing base. Kenya is the gateway to the region and an ideal regional base for Chinese investors to expand their business in the region and the rest of Africa. Many Chinese companies and businesses have set up their headquarters in Nairobi with an aim of expanding into the region. They have created job opportunities to Kenyans, increased the levels of local production and reduced the cost of machinery, electronics and automobiles in the region. Kenyans can now buy phones, laptops other home appliances from China due to affordability. Previously, these modern gadgets were such a luxury and too expensive for many Kenyans.

The flocking of Chinese investors and businesses in Kenya has played a big role in promoting Kenya’s economic development. China-Kenya cooperation continues to expand, bringing more benefits to both sides. 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.

China’s accumulative investment to Kenya amounted to USD 280 million by the end of 2012. Its increased investment has seen it become the second-largest source of foreign direct investment in Kenya last year. Compared to assistance, investment in business is a more constructive way to achieve common development on a much larger scale. This is achieved by bringing in technology, skills, management conceptions and employment opportunities to Kenyans. 

China’s investment to Kenya mainly covered real estate development, vehicle assembly, household electrical appliances, light industry, building materials, resource survey and exploration, food and beverages, tourism among other sectors.

Chinese companies have played a major role in improving the local conditions for economic growth and self development capacity by building transport, communication and energy infrastructure which are catalysts to the fast growth of our economy. They have completed the construction of Moi International Sports Centre, JKIA-Uhuru Highway-Gigiri (Unep) Roads, Gambogi-Serem Road, and a number of rural primary schools. Other projects include the new Unit 4 Passenger Terminal at Jomo Kenyatta International Airport, and Berth No.19 at the port of Mombasa. All these projects are aimed improving the Kenyan economy.

Why Sino -Africa Cooperation is not a lopsided tokenism festival

The new Chinese president’s visit to Africa was not only significant but symbolic. It was his first foreign trip as president and he chose to come to Africa. Although many view this visit as a good gesture and a demonstration of Africa’s importance to the world’s second biggest economy, skeptics are raising questions as to what intentions China has in Africa.

China’s association with Africa is longstanding. It started long before the colonialists came to Africa. It improved slightly during Africa’s liberation struggle in which China played a supporting role. However, when China eventually entered into the development arena proper, to establish a new type of strategic relationship with Africa, many viewed it with a lot of suspicion. Understandably, Africa had misgivings considering the after affects of colonialism. The continent was not ready to open up to another foreign nation whose agenda in Africa it could not tell. 

Nevertheless, China offered Africa friendly assistance with no political strings attached, initiated huge infrastructure projects with efficiency and cost effective ways and established a cooperative mechanism where African leaders and Chinese leaders could dialogue and pursue their common interests. A results oriented culture of development cooperation was nurtured and the country gradually gained the trust of the African people and established a blossoming development momentum in Africa.

China made a strategic choice to partner with Africa to achieve both Africa’s development and its own development. From the onset, the Asian giant made it clear that it needs Africa to develop and averred that its development is hinged on Africa’s development. The establishment of the Forum on China Africa Cooperation, which meets at the summit level every three years, has helped to coordinate the rapidly expanding engagement between China and Africa. 

Since its inception in 2000, China has earnestly implemented all its cooperation commitments made at the various FOCAC ministerial and Beijing Summit. The benefits for Africa include debt cancellation, tariff exemption, provision of concessional loans and the scheme of special loans designed to help small and medium sized African enterprises. These achievements, which have been well received by the African states, are practical and evident for everyone to see. China has focused on concrete programmes such as infrastructure, livelihood projects, education, healthcare etc, from which the African people can see and feel, and can benefit directly.

China is of course looking out for its own interests but so long as these interests are compatible with African interest and mutually beneficial, then Africa has no reason to shy away.  Former Zambian President Rupiah Banda well put it when he said, "The Chinese have selfish interests, naturally," He said. "We are prepared to do this with anybody else. It is not that this is reserved for China. It is that they are the only ones who seem to see it the way that we see it." He added that “China understands Africa better than most of the world and has proved it’s a trusted ally.”

China is now Africa’s largest trading partner and one of the world's leading investors in Africa. Annual trade between China and Africa reached about $200 in 2012 and Chinese imports from Africa have soared 20-fold in a decade.  However, Pang Zhongying, an Africa specialist at Renmin University in Beijing warns that China has to demonstrate that it is not repeating the old practices of the European powers. 

Naturally, increased engagement comes with its own challenges. Some African officials have voiced fears that China’s dominance as an exporter of cheap garments, appliances and other goods, and its appetite for unprocessed raw materials, have skewed economic ties and undermined African hopes to advance into industrial prosperity. 

This has been acknowledged by China’s new president and in his tour of Africa last week, he sought to assure African countries that his government would heed complaints that competitive Chinese companies were suffocating African efforts to nurture industry and jobs, and he promised aid, scholarships and technology transfers in an effort to counter those fears. He added that “China has and will continue to work alongside African countries to take practical measures to appropriately solve problems in trade and economic cooperation so that African countries gain more from that cooperation.”

Despite the balance of trade titling towards the Chinese side, Africa has made great strides by reaping huge benefits particularly when it comes to moving up the manufacturing value chain, increasing productivity, infrastructure development and fostering private enterprise. China is helping its African partners to industrialize both by building infrastructure such as roads, telecommunications, and power stations that cut the cost of doing business, and by investing in manufacturing. Its investments are bringing in technology, skills, management conceptions and employment opportunities.

What Africa should expect from Chinese new President Xi Jinping

Since the leadership transition began in China during the 18^th National congress of the CPC in November 2012 when Xi Jinping was elected heir-in-waiting, until his eventual endorsement on March 14, 2013, analysts predicted that the leadership transition in the most populous nation and the world’s second largest economy will significantly interest the entire globe. Rightly so, Africa is keen to observe and engage with the new Chinese president and expectations are unsurprisingly high.

There is no doubt that president Xi Jinping is Africa’s friend. He is a leader who regards Africa highly and has been instrumental in shaping China’s sociable policies towards Africa during his service in the Communist Party of China. He has consistently supported the improvement of Sino-Africa ties through the FOCAC Summits and has visited Africa severally as Vice-president to negotiate and discuss ways of improving Sino-Africa relations. His endorsement as president offers him an opportunity to implement his valued ideas for China-Africa cooperation and continue from where his predecessor left. He has already expressed his intention to maintain the continuity of China’s favorable policies while adjusting its relations with Africa to achieve further success in our cooperative development.

President Xi Jinping is no stranger to Africa and understands Africa well. He is a pragmatic leader and we expect him to embark on solidifying the gains made and break new grounds in Africa. His ideas on China-Africa cooperation are well known and Africa expects him to expeditiously boost the new type of China-Africa strategic partnership. In his trip to Africa in 2010 as vice-president, Xi Jinping specifically called for concerted efforts to make the Forum on China-Africa Cooperation (FOCAC) stronger and more effective. 

He addressed the seminar marking the 10^th anniversary of the establishment of FOCAC in Pretoria, South Africa and asked the parties to be strategic in planning, encouraged practical cooperation and institutionalizing of FOCAC as a major engine to drive common development for China and Africa.

It is not surprising that Xi Jinping has chosen Africa on his first foreign trip as president. It is a vivid demonstration that he attaches great importance to the new type of strategic partnership with Africa and what role Africa plays in China’s foreign policy. This visit is crucial to the continent’s future development. It will promote the friendly relationship that China and Africa have sustained so far and it will offer him an opportunity to announce his specific ideas and policies for Africa in the coming years.

We should therefore expect the new president to strengthen and accelerate the pace of comprehensive cooperation between China and Africa.  He has always called for expansion of China Africa cooperation to new areas and he is determined to lift China-Africa ties to higher levels by boosting political, economic and cultural cooperation as well as coordination on regional security and major global issues. "No matter how situations change, China will attach importance to ties with Africa, remain a reliable friend and faithful partner of African nations,” President Xi said when he met with Dlamini-Zuma at the Great Hall of the People in Beijing in February this year. "Africa is a continent of hope," he said, adding that China supports the self-determined development of and the solidarity among African countries as well as their pursuit of progressive paths suitable for their own national conditions.

In the recent report to the 18^th national congress of the Communist party of China (CPC), former president, Hu Jintao outlined China’s diplomatic priorities in the new era that president Xi is expected to implement. The report highlighted China’s commitment to the improvement and the growing solidarity, friendship and cooperation with Africa on the basis of equality and win-win cooperation. Former president Hu Jintao served 20 billion US dollars to African countries meant for the construction of vital infrastructure such as new roads, railways and ports. The loans are also meant for investment in small scale industries and agriculture to enable higher volumes of trade and export. There has been a sustained increase in foreign direct investment from China to Africa in the last few years and this is bound to continue.

China and Africa share many common interests and our friendship and cooperation has created more economic opportunities for Africa. There is a lot to share and many substantial areas of cooperation that can be exploited. President Xi Jinping has pledged to continue to support and improve the mutually beneficial cooperation with Africa and his tenure is expected to yield more benefits to African development.

New Kenyan Government offers new opportunities for China-Kenya Cooperation.

China and Kenya have successfully established a mutually beneficial relationship over the last few years. The last decade, under President Hu Jintao and Mwai Kibaki has seen china-Kenya friendship and cooperation achieve historical heights.  As the two leaders leave the centre stage for the new leadership, it is important to maintain and enhance this relationship to tap into the unlimited opportunities that this relationship continues to create. As Kenya undergoes the process of installing a new administration, the new Chinese leader, Mr. Xi Jinping has already expressed his intention to maintain the continuity of its policies while adjusting its relations with Africa and developing countries to achieve further success in our cooperative development.

As the second largest single economy, through achieving steady growth, adjusting the economic structure and improving industrialization, information and communication, urbanization and modernization of agriculture, China has become the engine of the global economy. Its development has created more business opportunities to Kenya and boosted the recovery of the global economy. Over the last ten years that the two leaders have been in power, China and Kenya have established a long-term stable and mutually-beneficial relationship. They have established bilateral exchanges and cooperation on trade, infrastructure, energy, medical service, culture, education, technology, tourism and other areas. 

This leadership transition in both countries offers another exceptional opportunity for the incoming leaders to enhance and solidify the strategic cooperation already in place. We expect that the pace of comprehensive cooperation with China will be strengthened and accelerated as the two countries embark on a new period of cooperative development under a new set of leadership. China and Kenya have a lot to share. There are many potential areas of substantial cooperation that can be exploited. For Instance, our agricultural, Industrial and economic cooperation has a lot of potential and a promising future. China offers learning and cooperative opportunities to the new national and county governments and a development path that has been tested and proven to be effective. 

Learning from China’s development pathways is particularly timely in lieu of the recently established county governments that seek to advance development from the grassroots level. Kenya boasts abundant agricultural resources, while China is a advanced agricultural country with mature and applicable agricultural technologies.Therefore, the new national and regional governments must consider consulting a country that has successfully transformed its agricultural sector and managed to feed its huge population that accounts for 1/5 of the world’s total with just 10% of global farmland and the global average for water resources per capita. China’s transformation emphasized on agriculture which is estimated to have contributed to poverty reduction four times more than growth in the manufacturing and services sectors.
 

When food production is sufficient, industry thrives. After the boost in agriculture and rural economy development, China’s reform focused on industrial growth through gradual external openness. Farm produce needs to be processed, preserved and value added. China established special economic zones where market driven policies and flexible government measures were implemented to attract foreign investors and business to invest in China. These included investment in new infrastructure like roads, energy and telecommunications. The government provided banks and land to set up industries and preferential tax exemptions for foreign firms who wanted to invest in China. 

Many of these specific approaches to increasing agricultural productivity, food security and economic development if appropriately adapted to the Kenyan situation, may help the new leadership improve the lives of Kenyans greatly and boost economic growth. The objective should be to create food security, rural stability, surplus income and labor supply to drive industrial development and in turn economic development.

China's investment to Kenya has played a big role in promoting Kenya’s’ development and it is expected that the new leadership will take this into account. Kenya needs China to support its economic and social development as it strives to fulfill its economic and development goals set in the Vision 2030 development plan. With the same cooperation from the two sides, and taking advantage of the new opportunities, Kenya has a chance to benefit a great deal from China’s experiences and lessons, bringing more benefits to the people of Kenya.

China supports the People's choice in Kenya

As the people of Kenya slowly disengage from the spirited process of electing its new leaders, Kenyans will remember and continue to debate the role of the international community and diplomatic partners in this arduous process.

While several foreign countries and foreign media gave controversial opinions on the highly polarized elections, China stuck to the principle of non-interference. China does not interfere in the internal affairs of other countries or impose its will on others. Its foreign policy, especially towards Africa is based on equality, mutual respect and win-win cooperation.

In a press conference just before the elections, the Chief of information and public affairs section at the Chinese embassy in Nairobi reiterated that China will strictly adhere to the principle of non interference and expressed their confidence in the Kenyan people to conduct peaceful and credible elections. He stated that China is ready to work with the new government. Friendly states respect each other’s sovereignty, core interests and choice of social system and development path.

Despite China’s growing influence internationally, coupled with increased interest in Africa, it has shown respect to Kenyans by letting them elect leaders of their choice.

Equality and mutual trust constitute the political foundation for the sound and steady growth of International relations in the new world order. Countries, big or small, developed or developing are all equals. This is the norm enshrined in the UN charter and universally accepted. 

However, hegemonism, power politics and neo-interventionism continue to plague the international system. International political inequality still exists, and the right to independent choice in politics, economics and overall development of developing countries is still widely abused.

China is a rising global power both politically and economically. Nevertheless, it has remained humble and respectful developing countries. Despite its rising global status and power, China is still a developing country and has stood with developing countries in difficult and trying times. It has persistently opposed outside interference in the internal affairs of other countries and encouraged strengthening of local and regional mechanism to deal with challenges related to politics, justice, governance and social system.

In the report to the 18^th National congress of the Communist Party of China, the outgoing president of the people’s republic of China; Mr. Hu Jintao stated that his country continues to call for equality, mutual respect, inclusiveness, mutual learning and mutual beneficial cooperation in international relations. China has called on all countries to observe the purposes of the UN charter.

Every nation has its own distinctive features which may be different from one another, but none is superior or inferior to others. Various cultures can learn from each other’s strengths and weaknesses and vitally promote greater democracy in international relations. This cannot be achieved by coercion, threats and dominance but by dialogue that nurtures understanding and builds confidence amongst the people.

Whereas the international community and partners are entitled to their opinions on the Kenyan process, they should be mindful of avoiding actions and statements that could be interpreted as interference.  Any action that has the potential to influence persons to vote or refrain from voting for a particular candidate is a violation of the principles of the UN Charter on non-interference. It is therefore imperative that members of the international community support the newly elected leadership as they represent they will of the people and continue working together with the new government to foster growth and development.

We are better off following the Chinese growth Model -The Independent model

China’s progress since reform and opening up in the late 1970s has displayed a model of independent development, especially for African countries that are pursuing their development take off. African leaders must learn from the Chinese leadership’s single-mindedness and commitment to economic reforms. The Chinese leaders have demonstrated that is possible for poor countries to transform themselves independently through concrete economic reforms supported by state institutions. The Chinese model has taught us that the market and state can coexist and complement each other for development.

The market economy was vigorously prescribed to African countries as a way of dealing with the debt crisis and other economic challenges facing the continent. African countries were coerced into undertaking economic reforms by the World Bank, IMF and European countries to revive their struggling economies. Despite massive lay off and government restructuring, these policies failed miserably.

Meanwhile, the Chinese leaders were thinking for themselves after observing what was going on in Africa and Europe. They were reading the global economy and adjusting accordingly to new trends. China started reconfiguring its economy from manufacturing to more high-end technological approaches using local resources and innovation. It relied on the export of goods to grow its economy, using affordable labor force.

Many westerners underestimated China’s capacity in the global economic playground. Many economists predicted that its agricultural, financial and automobile industries would collapse because China did not follow their development models. They emphasized that without tariff protection, China’s domestic enterprises could not challenge European and American multinationals as Japan and South Korea had done.

Nonetheless, China continued to pursue its own unique development model based on local conditions and over the last decade, its economy has steadily grown at an average rate of 10% becoming the second biggest economy in the world and then engine of global economic growth. China’s leading role in shifting global economic dynamics is an outstanding scenario not seen since the Industrial revolution. China has now gained an upper hand and is leading by example. China does not interfere, not advocate interference in the internal affairs of other Nations but rather it encourages each partner to establish its own unique development model that best suits its environment.

China’s fast growth must offer lessons to Africa on the limitations of western development prescriptions. Many African countries now look to China as a model of growth and development. Africa must avoid excessive consumption and strategically implement independent policies that work for its local conditions. We must create new patters of trade, one that features south-south cooperation. Africa must trade with itself more. Kenya and other African countries could increase regional trade and industrial production of goods by following the Chinese model, which emphasizes the harnessing of local resources and local conditions to power economic growth.  Only then can we achieve sustainable development.