Mechanism to address trade deficit between Africa and China needed: Ramaphosa
President Cyril Ramaphosa has urged a meeting of the Forum on China-Africa Cooperation (FOCAC)‚ currently under way in Beijing‚ to find ways of resolving the trade imbalance between China and the continent.
FOCAC meets every three years to assess trade relations between China and 52 African countries. This year’s meeting is being co-chaired by Ramaphosa and his Chinese counterpart‚ Xi Jinping.
Ramaphosa said while China was making massive investments across the African continent‚ a mechanism needed to be found to address the trade deficit between the two.
Last year‚ trade between China and African countries increased by about 14 percent to $170-billion‚ with the Chinese getting the bigger slice of the cake.
"There's been rapid growth‚ with Africa now being China's largest trading partner‚” said Ramaphosa.
"Much of what is exported from Africa is raw materials and primary product. Much of what is imported from China is finished goods. We are exporting to China what we extract from the earth. China exports to us what it makes in its factories.
"This obviously limits the ability of African countries to extract full value for their abundant natural resources and to create work for its people.
“It is through platforms like FOCAC that we should work to balance the structure of trade between Africa and China‚" said Ramaphosa‚ adding that he was pleased that Xi had committed to addressing the matter.
Ramaphosa said the economic value of FOCAC was becoming more important in the context of "an increasingly uncertain global environment".
"There's a renewed threat to the rules-based‚ multi-lateral global trading system‚ which‚ although imperfect‚ does provide stability‚ predictability and a certain degree of fairness.
"We should be using platforms such as FOCAC to reaffirm our shared commitment to multi-lateralism and a fair and transparent system of international trade."
Ramaphosa rejected "the view that a new colonialism is taking place in Africa"‚ owing to China’s rapidly increasing economic role on the continent.
In his speech‚ Xi hit out at the resurgence of protectionism in the global economy – an indirect jibe at US President Donald Trump‚ who is embroiled in a trade war with China over tariffs between the two superpowers.
"China will reject protectionism and unilateralism‚" said Xi.
The Chinese president also announced a $10-billion fund for development finance‚ a $5-billion fund to finance imports from Africa and another $10-billion in direct investments in Africa over the next three years.
"In addition‚ for Africa's least developed countries‚ heavily indebted and poor countries‚ landlocked developing countries and small-island developing countries that have diplomatic relations with China‚ the debt they have incurred in the form of interest-free loans from the China government‚ due to expire in 2018‚ will be exempted‚ " said Xi to loud applause from a hall packed with African heads of state and business leaders.