Get used to public debt, China tells Kenyans - Daily Nation

Get used to trade imbalance and public debt, China tells Kenyans

Tuesday March 20 2018

Standard gauge railway

Kenya's SGR project financed by Chinese loans. Beijing is also the largest creditor to Kenya, having financed major infrastructure projects like the Thika Road and the standard gauge railway. FILE PHOTO | NATION MEDIA GROUP 

By AGGREY MUTAMBO
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The Chinese government has asked Kenyans to get used to trade imbalance and public debt in order to get industrialised.

Visiting top Chinese envoy for Sino-African relations Zhou Yuxiao said on Monday that critics of China’s trade with Africa had forgotten that Beijing was in similar circumstances years ago.

“In this world, striking an absolute balance is not possible. In Kenya, you are at the first stage of industrialisation, so there are certain things you need (to buy). Initially, this imbalance is unavoidable but later, we can try to rebalance,” Mr Zhou said in a statement, yesterday.

Mr Zhou, a former Chinese ambassador to various countries in Africa including Nigeria, Liberia and Zambia, was in the country to market the Forum on China-Africa Cooperation.

The forum, whose main focus is development, brings together African countries.

This year’s summit will take place in Beijing in September.

XI PLEDGE

Its focus could be reviewing the status of the Sh6 trillion pledge Chinese President Xi Jinping made to African leaders during the last meeting in South Africa.

But while China says it is open to finance African projects, critics in Kenya argue the Chinese have brought in debt and cheap imports that are eating into local industries.

“When I was a kid, the biggest problem was how to buy things because there was a shortage. Now, we have a headache in finding where to sell,” Mr Zhou argued.

“This situation did not just drop from the sky. Industrialisation helped us to be where we are,” he added.

China has been Africa’s largest trading partner since 2009, with 15 per cent of the continent’s imports coming from China.

In Kenya, that trade was about $6 billion (Sh600 billion), but this was mostly favouring Beijing.

This is about six times that between Kenya and the US ($1.02 billion).

TRADE DEFICIT

In 2017, China’s trade deficit was Sh317 billion in favour of Beijing.  Nairobi exported about Sh10 billion worth of goods in the same year.

But Beijing is also the largest creditor to Kenya, having financed major infrastructure projects like the Thika Road and the standard gauge railway.

China holds more than half of Kenya’s Sh587 billion external debt, according to the Kenya Bureau of Statistics as at January this year. The official, however, said the situation is normal for any country aspiring to develop.

“Too much trade imbalance is not good for China either. And we are launching a specific policy targeting least developed countries to find ways of selling their products to China,” he said.

 “There is going to be preferential treatment to least developed countries so the challenge is for you to exhibit your products to the Chinese people,” he said Mr Zhou.

 “If you want to solve the problem of trade imbalance, develop first. But if you want to restrict others from selling to you, I don’t think that will help,” he said.