In an interview with Dr A. Mebtoul by Xinhua to be published shortly, the economic expert together with most economic analysts say that China’s economy plays today the role of stabilizing the global economy and a source of growth for the world. Here are below 2 questions and their answers by the University Professor. Excerpts of that interview are reproduced here below.
What is the economic relationship between China and Africa?
A poll conducted by Afrobarometer in 2016 in 36 countries of the African continent shows that, for 63% of Africans, Chinese influence was “rather” or “very” positive, and 24% of respondents believe that China has the best development model for Africa, just behind the United States, with 30% of Favourable Opinions.
For Jeffrey Sachs, the director of the Earth Institute at Columbia University, African countries need trade and investment. No matter where it comes from – from the USA, Europe, China, India, Turkey, Russia, Brazil – it is always good news to have new partners.
Since 2009, China has become Africa’s first trading partner. According to the Financial Times, Beijing now has 52 diplomatic missions In the African capitals, against 49 for Washington.
Some projects in Africa without being exhaustive, where about 10,000 companies are active in the continent and $60 trillion in industrial production, or 12% of African production and 90% are private Chinese companies.
- There are 200 Chinese companies for the construction of an industrial city in Tangier, Morocco; a project that is worth an estimate of $10 trillion scheduled for ten years.
- The western and central portion of the East-West motorway In Algeria with an initial cost according to the preliminary technical data sheet of $6.2 trillion undertaken by an all-Chinese CItic-CCBC Consortium.
- The rehabilitation of the Dakar 633 km Railroad costed $1.15 trillion.
- The Refinery of Djermaya with 20,000 barrels of capacity inaugurated in 2011, costed $588 million.
- The re-taking of the shares of Rio Tinto in the iron ore of Mount Simandou Range 1, at $1.3 trillion.
- The growth and modernization of the autonomous port of Abidjan $1.2 trillion.
- The Construction of the Multimodal port of Doralech costed $580 million.
- The construction of the Internet backbone of FIber Optic Grid for a cost of $175 million.
- The Construction of the Adjaria 147 MV Hydro Power Station for a Cost of $405 million.
- The Grand Poubara Dam with a cost of $398 million.
- The deep-water Port of Kribi phase one and two for a $1.2 trillion.
- The takeover of Freeport Mc Moran shares in the Tenke Fungurume copper project, cost $2.65 trillion.
- Construction of the Kintélé Sports Complex, cost $580 million.
We have on a commercial level a dynamic trend, with in the first half of 2017, trade between Africa and China standing at over $85.3 trillion, which would reach almost $200 trillion by end of that year, up 19% according to official figures of Chinese Leadership.
During the first six months of 2017, Chinese imports from the African continent almost doubled (46%) compared to the same period, a year earlier, by around $38.4 trillion, while exports to Africa iNcreased by 3% To An amount of nearly $47 trillion.
The upward momentum of the Asian giant exports to African countries has been largely driven by the naval, rail and aeronautical equipment sectors, which have risen sharply to an increase of 200%, 161% and 252% respectively. This performance was made possible thanks to the strengthening of cooperation between the two parties, materialized by a series of major works including the Mombasa-Nairobi railway but the 46% increase in imports, could be the result of an aDjustment of the prices of certain raw materials, such as Hydrocarbons.
Also, not forgetting the geostrategic factor, a good relationship with the 54 African countries, does offer China the WAy to expand its geopolitical influence As put as “Having good relations with the 54 African countries is very important for China” In The report of McKinsey, a US consulting firm: Chinese companies already generate 12% of African industrial production estimated at $500 trillion.
In the infrastructure sector, the market share of Chinese enterprises would already reach 50%. More than ten thousand Chinese companies operate on the mainland and 90% of them are private. Their income generated in Africa could grow by 144% and reach $440 trillion. Per a report published on June 28, 2017, McKinsey predicts a bright future for Sino-African relations. In fact, the international consulting firm is putting forward two scenarios.
The First: if Chinese investments on the continent carry on at the same pace, the middle-empire groups will see their African revenues go from $180 trillion of today to $250 trillion in 2025.
The Second: according t McKinsey, Chinese companies can significantly increase their African activities, be it in the sectors that they take precedence in today, i.e Mines and infrastructure or in other areas such as agriculture, bancassurance, telecoms, transport and logistics.
In the latter case, their incomes could reach $440 trillion in 2025. Some NGOs and few African leaders have alleged that China would not be promoting any transfer of knowledge as well as ignoring the current world ecological challenge. Recently several Chinese companies understanding this, have initiated some close knitting relationships with local Civil society and international NGOs on environmental issues or on the transfer of technologies to facilitate the transmission of their know-how.
What is certain is that Chinese investors remain motivated by first the search for raw materials as attracted by the Sudanese, Angolan and Nigerian oil, by Congolese Copper and Zambia or even by Namibian Uranium thus some form of Dependency effects have started to be noticed. The Crisis of 2009 and then that of 2014/2015 showed that the drop in exports to China has considerably weakened African economies.
The hypothesis per COFACE (to be verified) of a decline in activity in China would have an impact on the activities in Africa as the structure of the Chinese economy tend to rapidly change; all sectors that are related to infrastructure and raw materials in China are more penalized than the sectors linked to the emergence of the middle class and the consumption of households. To mitigate shocks, the challenge for African countries, whose production of manufactured goods accounts for less than 1% of African exports would be to be able to restructure their exports in order to benefit from these sectors in China and find other products than oil and minerals to export to China hence the importance of a win/win cooperation Africa/China to diversify their economies.
What is the economic relationship between China and the Arab world?
In 2016, we celebrated the 60Th HasNniversary of the first diplomatic relations between China and the Arab countries. Since June 2014, at the 6Th Ministerial Conference of the Sino-Arab Cooperation Forum in Beijing, since we have waited various Forums on Sino-Arab cooperation, according to President Xi Jinping to propel and to radiate the spirit of the Silk Road and deepen the Sino-Arab cooperation because of the economic belt of the Silk Road and the Maritime Silk Road of the 21St Century, but also the setting up of a “1 + 2 + 3” cooperation architecture that will play a key role in facilitating trade, reducing costs and therefore increasing trade between China and the countries of the region” and to help promote a new encounter of Chinese and Arab civilizationS.
Hence this proposal of the creation of a free trade area between China and the GCC for the construction of priority industrial parks and to strengthen cooperation on oil and gas and infrastructure.
For the Arab League “Relations between the Arab world and China are historical and deeply rooted” with China intends to politically promote peace in the Middle East where according to its leaders the world will not be at peace without stability in the Middle East, China continuing to support the Middle East peace process and the creation of an independent Palestinian State. However, the investments between the two partners remain unbalanced, as China invested almost $2 trillion in the Arab world, compared with $700 million of Arab countries Investments In China. The Chinese and Arab partners point out that to stimulate this further, changes in investment laws must be adopted to attract investors. Between 2004 and 2014, the amount of bilateral trade was multiplied by 20, from $25.5 trillion in 2004 to $238.9 trillion in 2013.
In the first nine months of 2015, the volume of bilateral trade between China and the Arab countries rose to $155.3 trillion, while China imported 110 million tonnes of crude oil from these countries, an increase of 4.6%.
China is now the second largest trading partner of the Arab world, and the largest trading partner for nine Arab countries. In the next ten years, the Chinese government plans to trade nearly $600 trillion.
Several sectors of activity are the subject of cooperation agreement between China and some Arab countries. Among them are technologies and innovation, agriculture, energy, transport, information, environment, health and satellite navigation as well as the long and medium-term cooperation in the areas of culture, press and training.
From now on, some 20 Chinese universities offer Arabic language courses, while 9 Arab countries open a total of 11 institutes and 5 Confucius classes, and more than 14,000 Arab students are pursuing studies in China.
11 Arab countries are now a favorite destination for Chinese tourists. Witness the fact that China and the Arab countries are connected by 183 regular flights per week, allowing the movement of 1,020,000 people each year in both direction.
Many professionals practising in the Arab countries received training in China, resulting in a total of 8,980 medical personnel in 8 Arab countries, which is part of the intellectual support favourable to the development of Arab Countries in different fields.