China-Africa Cooperation Pushes Forward Industrialization in Africa

At the recently concluded 10th BRICS summit in Johannesburg, South Africa, the theme “BRICS in Africa: Collaboration for Inclusive Growth and Shared Prosperity in the 4th Industrial Revolution” was produced. This makes references to key words including “industrial revolution” and “Africa’s industrialization.” Can Africa become the world’s future factory? Can Africa transform its resource endowment into “made in Africa” developmental advantages? What role will China-Africa cooperation play in the continent’s industrialization? These are vital questions related to Africa’s future development.

Vision and Action

Clearly, industrialization is an important foundation for a country’s modernization as well as the inevitable course a country must take to promote economic development. Africa, home to abundant natural resources and gifted with a demographic advantage, is undergoing a long industrialization process full of twists and turns. After suffering chronic colonial rule and a lack of economic structural diversity, industrialization in most African countries continues to lag and remains at basic levels. Africa’s industrial output accounts for less than 3 percent of the world’s total. Although the continent is still in the early stages of industrialization, many African countries set industrialization as an important economic goal when they first achieved independence. African leaders aspire to escape economic dependency on their former colonial masters, shift away from highly dependent economic structures and seize economic independence and autonomous development in the realest sense.

In the 21st century, against the backdrop of economic globalization, African countries are taking actions to embrace and promote industrialization even more enthusiastically. In succession, African countries and the African Union have issued important documents on development strategies including The New Partnership for Africa’s Development (2001), Accelerated Industrial Development in Africa (2008), Program for Infrastructure Development in Africa (2013) and African Agenda 2063 (2013). Africa aims to realize major development during the 21st century through industrialization and economic integration.

Fueling Development

Production capacity cooperation between China and Africa conforms to the developmental needs of both sides. A solid foundation for such cooperation has already been laid. After four decades since China started its reform and opening up, the country has entered the middle and late stages of industrialization, so it possesses development capital, appropriate technologies and equipment and abundant experience in transforming an agricultural country into a global factory. Because China is driving economic restructuring and upgrading to a deeper level, a large amount of production capacity and technology needs to be migrated. Most African countries, still at the initial stage of industrialization, are in great demand of products such as steel and cement. However, most of these products need to be imported. Consequently, these African countries would benefit greatly from taking production capacity from China to accelerate their respective industrialization processes. Conditions for historic China-Africa production capacity cooperation are ripe.

Governments and enterprises from both sides also strongly support and promote China-Africa production capacity cooperation. During their visits to Africa in 2013 and 2014, respectively, both Chinese President Xi Jinping and Chinese Premier Li Keqiang proposed development goals of “building three networks and promoting industrialization” for Africa. China will aid Africa’s construction of “three networks,” namely railway, highway and regional aviation networks, and help drive industrialization in Africa. African countries also expect to strengthen industrial cooperation with China as the latter has launched a new round of industrial restructuring. They hope to promote industrial development and realize technological progress by absorbing China’s production capacity.

At the 2015 Johannesburg Summit of the Forum on China-Africa Cooperation (FOCAC), Chinese President Xi Jinping announced ten major cooperation plans with Africa, totaling US$60 billion in funding support. The plans covered cooperation on industrialization, agricultural modernization, infrastructure, finance, green development, trade and investment facilitation, poverty reduction, public health, cultural and people-to-people exchanges, peace and security. Of these plans, China-Africa industrial cooperation, especially production capacity cooperation between China and Africa and the promotion of industrialization in Africa, was itemized most prominently. To ensure a successful implementation of the industrial cooperation plan, an initial contribution of US$10 billion was designated for the China-Africa production capacity cooperation fund. An increase of US$5 billion went to both the China-Africa Development Fund and the Special Loans to Support Small and Medium-sized Enterprises in Africa.

Early Harvests

Thanks to tireless efforts in recent years, China-Africa production capacity cooperation has already produced fruits. Since the 2006 Beijing Summit of FOCAC, China has established six economic and trade cooperation zones in five African countries: the Ethiopia-based Eastern Industry Zone, Lekki Free Trade Zone in Nigeria, Zambia-China Economic and Trade Cooperation Zone, Nigeria Ogun Guangdong Free Trade Zone, Mauritius Jinfei Economic Trade and Cooperation Zone and Suez Economic and Trade Cooperation Zone. Nearly 100 industrial parks jointly built by China and African countries are now either under construction or in operation in Africa. By the end of 2017, the total stock of Chinese investment in Africa exceeded US$100 billion and 3,500-plus Chinese enterprises were investing and operating in Africa. These Chinese enterprises launched new projects in Africa, providing new space for the continent’s development as well as for their own business transformation.

On January 27, 2015, China signed a memorandum of understanding with the African Union on infrastructure construction cooperation. According to the document, China would, within the framework of African Agenda 2063, enhance cooperation with African countries in fields such as railways, highways, regional aviation and industrialization as part of a bid to accelerate the economic integration of Africa. Early progress has already been achieved in the first group of African countries including Tanzania and Ethiopia, which have carried out production capacity cooperation with China.

Tanzania presents a prime example. One of the first African countries to carry out production capacity cooperation with China, Tanzania signed a framework agreement with China on April 28, 2015. The core of Tanzania’s current five-year development plan targets industrialization, with an eye on accomplishing connectivity on production capacity cooperation with China. In 2009, Tanzania began constructing export processing zones to attract foreign investment, expand exports, create jobs and enhance production technologies and economic management level by developing export-oriented industries. So far, 12 Chinese enterprises have settled in these export processing zones.

Two important sectors of China-Africa production capacity cooperation — infrastructure cooperation and industrial park construction — are rolling full-speed ahead in Africa today. China has helped Africa build many railways, including the Mombasa-Nairobi railway that connects the Kenyan capital of Nairobi with the port city Mombasa and the Ethiopia-Djibouti railway which links Ethiopian capital Addis Ababa to the port of Djibouti, in addition to more railways now under construction in Angola and Nigeria. “The foundations we lay today will lead us to a new chapter of industrialization,” declared Kenyan President Uhuru Kenyatta at the opening ceremony for the Mombasa-Nairobi railway on May 31, 2017. 

The author is a researcher with the Institute of West-Asian and African Studies, Chinese Academy of Social Sciences.