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Slow yet confident

Slow yet confident

The fact that the Chinese economy is currently registering its slowest growth in 25 years and what this could mean to the global economy has become one of the hottest topics of discussion in the past one month. Investors are worried about the scale of the slowdown, which in turn had set off a wave of volatilities in stock, commodities and currency markets across the world.  In fact, China's problems is said to have been compounded by weakness elsewhere in the world economy. Last Saturday, Premier Li Keqiang announced a growth target of 6.5 to seven percent for the current fiscal year at the annual National People's Congress. The figure came down from last year's seven percent and above. Amidst the unfolding saga, the slowdown registered in the world’s second biggest economy is feared to have the biggest impact on Africa—a continent with a much anticipated growth streak thanks in no lesser part to China’s heavy investment in the  past decade. According to Africa Research Institute, if the unfolding economic slowdown continues, it might spell disaster for Africa. Hinting the overall trade volume between Africa and China—amounting to more than USD 200 billion just last year—experts predict that the continent’s single biggest partner will possibly hamper the promising growth in infrastructure, energy and other sectors. Henok Reta of The Reporter sat down with Kuang Weilin, Ambassador and Head of Mission of the People’s Republic of China to the African Union, for brief interview after he spoke at a forum organized by Oxfam regarding the impact of the Asian giant's economic slowdown to African economies. Excerpts:

The Reporter: It is only few months since the Sino-African summit was conducted in Johannesburg, South Africa, yet again here you are sitting down with African nations once again. What was so urgent that you had to speak at this event today?

Kuang Weilin: Well, as you know, the Sino-Africa Summit we held in Johannesburg in December last year; and in many ways it was a milestone for the ongoing cooperation and partnership between China and Africa. The most important thing about that meeting was reassuring China’s commitment to Africa, a continent full of opportunities for mutual benefit. The summit is a platform where China and Africa can have a dialogue about promoting agricultural in the continent. Nevertheless, this event, that we are having tonight, is also an important one with regards to the impact of China’s current economic slowdown and its impact on Africa. As you have heard, the phenomenon has become a major topic for international news agencies and that it is raising concerns among countries with whom China is engaging in bilateral trade and investment relations including those in Africa. These pessimistic reports about China have to be reviewed and corrected at some point because it can have an adverse effect on Africa. Some have even gone as far as predicting that China’s economy will be in for a hard landing and that Sino-Africa cooperation may take a different turn. I believe that it is very important for us to have an accurate perception of the current economic situation in China and its implications for Sino-Africa cooperation in 2016 and beyond. I think this event is a timely one to clarify some of the assumptions regarding China and its economic partners. Chinese president and African leaders have pledged and made a commitment to strengthen existing cooperation and to work on more projects for the coming three years. So from China’s point of view, there are a lot of activities which has been done to realize all of these projects we crafted together with African nations.

So, are you saying that China’s current economic condition will have bad implications for the future of continent?

First, it should be clear that China’s economy is not alone or separate from the rest of the world though it is the second biggest economy in the world. It is integrated with the world economy; so current conditions have a lot to do with the unsatisfying global trend exhibited in the past. We have maintained a remarkably steady growth over the past thirty years and now we are entering what we assume to be a natural growth trajectory in economies where high-speed growth had been sustained for decades. The economic slowdown that we are experiencing today is a planned move since we can no longer maintain high growth rate for a long period of time. It is just unrealistic to assume that we can do a high-speed growth every year. This could not be something we could have year after year. Since the past couple of years, we decided to slowdown the economy so that we can restructure the entire growth and economic plan. Since we started restructuring the economy, we have seen indications that proved we were in the right direction. For instance, the consumption of goods in China has contributed about 66 percent to the national economy while the civil service sector contributed 50 percent. That is something which made us happy. But, our partners can’t be happy like us as they might fear possible impacts to their economies. Regarding Africa, first, China is not the number one importer of commodities from Africa. Secondly, the quantity of imported commodities from Africa is not declining (in a noticeable manner) due to the slowdown. To the contrary, China’s investment in Africa might have been increasing. I think people must have been focused on the commodities rather than the level of investment.

Many people claim that Africa’s economic fortune is increasingly dependent on China and given recent signs of slowing down in the Chinese economy, they fear for the future of the continent. What can you tell them?

Well, I think some of the concerns of these people are really understandable that the economic relation between Africa and China is so tight that it almost sounds as if the slightest movement would have great impact on each side. I would say the sensitivity is highly understandable. But, there are points that these people should keep in mind as well. In anyway, China’s robust and restructured economic path would generate even more opportunities for Africa in the future. So, the question should really be how Africa could reinvigorate its effort in order to benefit from this balanced and restructured economic move in China. There are always two sides of a coin. I, therefore, tell those people to stay optimistic and understand that the road we are taking right now will result in more opportunities and better benefits.

Despite China's massive interest in Africa, do you think China, due to the restructuring, will be forced to leave a room to be filled by other countries such as Turkey and India?

One thing I want to make clear is that China will maintain its medium-high and sustainable economic growth in the years to come as all measures are taken for the sake of sustainable growth. I’m sure the restructuring will do more and China will remain in its place; there should not be any worries about this at all. Last year, despite the tremendous downward pressure of the world economy, China courageously pursued structural economic reforms and achieved a growth rate of 6.9 percent with GDP base of over USD 10 trillion. Considering the gloomy global economy and self-restructure, it was a remarkable achievement. What I want to tell you is that China has no worries about other actors in Africa. We only focus on our side when it comes to Africa. We absolutely do not pay attention to the new forces; we rather give attention to new ideas and innovations. We are confident enough about that. At the end of the day, Africa’s development requires a joint effort and it’s not only China’s responsibility or China’s assignment to fulfill this commitment; so we would be happy to see more players coming to the field where there is no one victor or champion. It is a mutual partnership and global development.

Ethiopia is one of the key allies to China in the continent and a number of Chinese firms are involved in infrastructure projects in the country. Have you observed any change or effect to these projects in consequence to China’s economic slowdown?

In my personal observation, I have not seen anything new here and that those projects which are being carried out by Chinese firms are doing well. Maybe, a few problems could exist. But I am not well aware of any new stories regarding the activities of Chinese firms here if there is any at all. Being in Ethiopia is a very special opportunity for me in a sense that this is the capital of Africa; this would ease business and my duty. But more importantly, I see Ethiopia as a special place for its history. When I was assigned to be an Ambassador to Africa Union here, I felt happy that this is a country that I know well from a very young age through its last king, Haile Selassie I, whom I saw in the streets of Shanghai while he was visiting China. I’m really happy to see his proud motherland. As always, Ethiopia remains central in Africa for many reasons and China keeps its strong and historic relations with Ethiopia and Africa forever.

China has helped build some 300 massive dams in Africa; and currently Ethiopia is constructing one of the largest dams in world, what role have China played in this?

It is very important for Ethiopia to have such a massive hydro-electric dam if it is to become an industrialized country in the near future. And, China supports all African countries to develop their natural resources. We have been involved in those projects starting from human labor to material assistance. In the coming years, there is a bright future for China and all African countries in terms engagement in more projects like dams and other energy or power generating facilities. There is no doubt that China’s healthier economic growth would benefit Africa and Africa remains to be a major beneficiary of Chain’s economic growth. As we enter a “New Normal” era of economic growth it will surely be a better day for Africa. And in no sector have the Chinese been more critical to sub-Saharan Africa than they are in the construction of dams to provide hydropower for local industry, local consumption and potential export.

What do you think should the rest of the world know about the Sino-Africa relationship, which seems to be emerging stronger even in this challenging period?

In reality, China believes Africa should get out of its long-term situation when its development has been affected in many ways. China, in this regard, has always been direct and consistent in sharing its experience in fighting poverty and becoming a global superpower. The decade-long relationship between China and Africa has enjoyed respectable advantages demonstrating a perfect match for mutually beneficial cooperation. While China is comprehensively deepening its reforms and pressing a head with economic restructuring, African countries are striving for industrialization and agricultural modernization through independent planning. Therefore, China can provide what Africa needs while Africa can do the same to China. Currently, the value of industrial output in the sub-Saharan region only accounts for 0.7 percent of the world’s values. The manufacturing industry in most African countries merely contributes less to the national economy, where in most cases contributing less than 15 percent to the GDP. So, we can see that industrialization is a weak link in Africa’s economic transformation. In this regard, China’s economic cooperation with Africa is not simply aimed at exporting products, but more importantly, transfer industries and relevant technologies, including training in management and skill development. In Africa’s endeavor to speed up its development, China is its most ideal, reliable and effective partner.