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Southern Africa region presents huge opportunities for China-Africa industrial cooperation

Updated: May 1,2015 3:23 PM     Xinhua

HARARE — Leaders of 15 southern African countries, ranging from resources-rich Democratic Republic of Congo to the continent’s manufacturing hub South Africa, have adopted a half-a-century strategy to industrialize the region.

Experts say the strategy can bring huge opportunities for China-Africa cooperation as Beijing announced earlier this year its intention to prioritize China-Africa industrial capacity cooperation.

The strategy, to be implemented in three stages spanning from 2015 to 2063, was endorsed at the Southern African Development Community (SADC) extra-ordinary summit of Heads of State and Government held in the Zimbabwean capital Harare Wednesday.

The strategy is anchored on three pillars, namely industrialization, competitiveness and regional integration and aims to turn the region from an exporter of minerals to a key global net exporter of processed goods.

SADC executive secretary Lawrence Tax told Xinhua in a recent interview that there was “big room” for Chinese investment.

“China can play a big role in the implementation of our industrialization strategy. China is an industrialized economy and we believe we can learn from what they have done to reach where they are and we can also learn from a technological point of view and the approach they have used in their special economic zones,” Tax said.

The Asian country could contribute by supporting the region’s infrastructure development as well as partner the private sector in implementing industrialization projects, she added.

Tax also urged host governments in Africa to create an enabling, conducive environment for the Chinese private sector to participate in the region’s industrialization drive.

Bilateral trade, direct investment, and loans-backed contract infrastructure project are the three pillars of China-Africa economic engagement. Among the three, Chinese direct investment is closely linked to the region’s industrialization.

According to official statistics, Chinese direct investment to Africa had mounted to around $30 billion by the end of 2014. The SADC region absorbed around 40 percent of Chinese investments over the years as Chinese set up factories, explored mines, and developed goods and services across the politically stable sub-region. In his visit to Africa last year, Premier Li Keqiang challenged Chinese investors and their African hosts to raise this figure to $100 billion in a relatively short period of six years.

Southern African Research and Documentation Centre (SARDC) executive director Munetsi Madakufamba also told Xinhua that SADC’ s industrialization strategy presented immense investment opportunities for China in such areas as value chain industries, infrastructure and special economic zones.

He said some of the proposed industrialization projects would create value chains across borders and such kind of projects required significant investment to materialize.

“There are various industries that can be established along the regional value chains and it’s a process that requires a lot of money and a lot of investment. So from an investment point of view I think this is where China can come in to invest in those kind of industries that can be established along the value chains,” he said.

Infrastructure that supports the industrialization process was still insufficient and this was another area where China could come in and assist.

“If we have identified the regional value chains across borders there is need to also have infrastructure that supports the same kind of value chains. That size of infrastructure is beyond the majority of our SADC member states in terms of building and this where China can come in,” Madakufamba said.

China has a rich experience in special economic zones and the region would want to tap into that experience to develop its own robust economic zones, Madakufamba said, adding that while China had developed is economic zones at a municipal level, the kind of economic zones that will be beneficial to SADC’s industrialization strategy would be those that run across borders.

Lin Songtian, head of the Chinese foreign ministry’s department of African affairs, told Xinhua in Beijing early April that China and Africa face “historic opportunities” as the Chinese market for basic industrial materials is saturated while less-developed African countries are crying out for them.

Take steel production as an example. China produces half of the steel in the world. Overproduction has dried up the profit margins for most steelmakers and driven small players out of the market. As part of a strategy move, China’s biggest steelmaker Hebei Iron and Steel Group (HISG) signed a contract with South Africa’s Industrial Development Corporation to build HISG’s largest overseas steel factory with a targeted output of 5 million tons per annum by 2019 when it is fully operated.

Rangarirai Machemedze, program manager for the SADC Council of Nongovernmental Organizations said the SADC region needs to come up with deliberate policies that look at harnessing financial resources and facilitating technological transfers through the China-Africa industrial capacity cooperation.

“As SADC we have to ask ourselves what kind of technology is relevant and this is another area where probably China can come in. China has managed to develop over the past decades because it managed to utilize transferred technology. So how best China did it is something that we can also need to learn from them,” he said.

Speaking at the summit, Tax said the private sector is already gearing itself up to walk the journey of industrialization and with this spirit, she hoped the region has set on the right path for growth and development. “We look forward to continued commitment by member states in the creation of an enabling environment, including the provision of the necessary resources and capacities as critical success factors,” she added.