Plan targets Kenya's trade gap with China

PUBLISHED : Friday, 28 April, 2006, 12:00am
UPDATED : Friday, 28 April, 2006, 12:00am

President Hu Jintao will unveil a plan this week to stimulate mainland demand for Kenyan exports, which the African country needs to narrow its trade gap with China.

Mr Hu was due to arrive last night for a two-day visit to Kenya, where he would announce the launching of a fund aimed at encouraging Chinese firms to buy more goods made in Kenya, Kenyan Trade and Industry Minister Mukhisa Kituyi said this week.

'This will perhaps go an extra mile to reduce the trade imbalance' between the two countries, Mr Kituyi said.

Chinese exports to Kenya grew 65 per cent to 12.7 billion Kenyan shillings ($1.38 billion) in 2004 from 7.7 billion shillings in 2000. Kenya's exports to China rose to 903 million shillings from 323 million shillings during the same period.

'What we need to encourage is Chinese investors to come and set up joint ventures with Kenyans to produce goods for export to the east and central African region,' Mr Kituyi said.

About 100 Chinese companies operated in Kenya on projects valued at more than 4 billion shillings, said Shao Weijian, commercial secretary at the Chinese embassy in Nairobi.

'Chinese investors are coming to Kenya because of its highly skilled labour force, friendly investment laws, liberal exchange rate laws and stable political environment,' he said. 'Above all we want to use Kenya as a gateway to East Africa and Comesa countries.'

Comesa, the Common Market of Eastern and Southern Africa, is made up of 20 African countries, including Libya, Angola, Zambia, Zimbabwe and Ethiopia.

But while China's skyrocketing demand for energy was the cornerstone of Mr Hu's trip, securing markets for its goods and expanding its geopolitical reach was also a goal, analysts said.

'Looking at the countries he has visited, he is not only seeking commercial ties ... but also to forge some sort of political unity,' said political scientist Ludeki Chweya.

Bloomberg, Agence France-Presse