From Zhejiang to Hunan, Chinese provinces are taking the reins of trade with Africa
- Some Chinese regions have a long record of involvement with the continent and their companies are investing billions in commercial projects
- But the priority is still to make a profit, analysts say
One of the provinces at the centre of China-Africa trade is Zhejiang, a coastal province in eastern China home to companies that have built warehouses, industrial parks and e-commerce infrastructure in African countries.
Last week, Chinese companies in Zhejiang announced a plan to bankroll 26 projects in Africa worth US$8.1 billion in a bid to boost trade with the continent.
The projects included a 1 billion yuan (US$140 million) by Zhejiang Gezhi Trading, a subsidiary of Merit Link Group, and Zhejiang Yingfan Trading to build an overseas warehouse for Merit in Algiers, the capital of Algeria. The Jinhua city government said the facility was expected to serve the company’s operations in the Middle East, North Africa, and Central and Southern Africa.
The deal was signed last week during the 2022 China (Zhejiang) Forum on China-Africa Economic and Trade Relations and the China-Africa Cultural Cooperation and Exchange Week in Jinhua, Zhejiang province. The event attracted 400 delegates from China and 47 African countries.
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Lauren Johnston, a China-Africa researcher at the South African Institute of International Affairs, said Zhejiang was among China’s richest and leading provincial hub for private-sector small and medium enterprises (SMEs) and also “one of China’s richer and more freewheeling and experimental provinces”.
She said it was also home to Yiwu, the consumer goods centre that attracted hundreds of thousands of in-person and online traders from across Africa and the Middle East.
Further, e-commerce giant Alibaba and its global digital commerce promotion institution, the electronic World Trade Platform (eWTP), were based in Zhejiang, with eWTP hubs in Ethiopia and Rwanda, Johnston said.
Alibaba owns the South China Morning Post.
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Yun Sun, head of the Stimson Centre’s China programme in Washington, said Zhejiang had a long history of pushing for economic engagement with Africa. “Given Zhejiang’s industrial endowment and its prioritisation of foreign trade, this should not come as a surprise,” she said.
However, Sun said “the challenge is whether China could break free from the self-imposed Covid-19 restrictions”. “At the current rate, China’s priority will have to be domestic economic growth and social stability,” Sun added.
David Shinn, an expert on China-Africa relations at George Washington University’s Elliott School of International Affairs, said Chinese provinces had a history of engaging with other countries, especially in trade, investment, education, tourism, and culture.
“Beijing has encouraged these contacts but retains control over foreign policy,” Shinn said.
Shinn said Zhejiang had been especially active in Africa, with Zhejiang Normal University a leader in education cooperation as both the base of the Institute of African Studies and having trained more than 8,000 African students.
“Zhejiang has a tourism exchange programme with Zimbabwe, Tanzania, and Ethiopia,” he said.
However, Shinn said “if past practice is an indication, not all of these projects will materialise, but they nevertheless represent a significant investment”.
“The ultimate goal of most Chinese provincial engagement in Africa is to make a profit.”
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In a recent report co-authored by Beijing-based consultancy Development Reimagined, the China-Africa Business Council (CABC) said Zhejiang had adopted a “bottom-up” interaction mechanism to promote China-Africa cooperation with the strong involvement of civil forces, including private companies, service centres, research institutes, and local chambers of commerce.
In addition, as one of the first provinces in China to start implementing e-commerce, Zhejiang has also highlighted e-commerce and overseas warehousing in its cooperation with Africa.
The total trade between Zhejiang and Africa reached US$43.4 billion in 2021, an increase of 17.2 per cent over 2020, placing it among the top trading partners with Africa.
CABC’s report said that as one of the key manufacturing hubs and textile centres in China, Zhejiang had diverse exports to Africa, from light industrial products to a combination of mechanical and electrical products, car parts, and other industrial products.
“Zhejiang imports not only commodities from Africa but also more value-added products, such as red wine from South Africa and coffee from Ethiopia,” the report said.
The ultimate goal of most Chinese provincial engagement in Africa is to make a profit
Wen Meizhen, a China-Africa researcher in Zhejiang, said lower-level authorities in the province encouraged local companies to invest in Africa.
She said Zhejiang was also promoting cultural, medical and educational relations with Africa. Wen said Zhejiang had built different platforms to encourage China-Africa trade, such as hosting events and inviting African leaders to visit local companies in China.
“Local companies themselves have tried to extend markets in African countries. These companies are not state-owned enterprises, they are more flexible than the former. They go to places where they can make profits,” Wen said.
She said this was also driven by migrants – Zhejiang province traditionally accounted for the biggest Chinese migrant community in Africa.
“The migrants move to different places where they thought they could make them money. Many of them went to Africa and lived there, then the companies in their hometown followed them.”
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Besides Zhejiang, other Chinese provinces such as Shandong, Guangdong, Hainan and Hunan, are signing individual deals to grow China-Africa trade. For instance, the Chinese province of Hunan, which is promoting itself as the hub for African agricultural trade, this week held a forum to link fruit buyers in China with producers in Africa.
In Africa, the province sources its fruit from South Africa, Kenya, Tanzania and Egypt. A statement released by Hunan authorities said several purchase agreements and strategic cooperation agreements worth 70 million yuan were signed during a China-Africa fruit promotion conference in Changsha in late November.
The province’s lawmakers early this year passed regulations to establish a free-trade zone and a distribution, trading and processing centre for African non-resource products, as well as the setting up of a “green customs clearance” system for African imports.
This is in line with President Xi Jinping’s promise during last year’s Forum on China–Africa Cooperation, to open up “green lanes” for African agricultural products, speed up inspection and quarantine, and expand the list of tariff-free items.
Industrial powerhouse Guangdong is another major Chinese province in the mix. Its trade volume with Africa hit US$43.71 billion in 2021, an increase of 9.5 per cent from the previous year, with mechanical and electrical products and agricultural goods the main exports.
It has invested in nearly 300 overseas enterprises in Africa, involving an estimated US$2.5 billion, while provincial capital Guangzhou hosts the most important sea entry and exit point for African trade, operating 22 container routes to major ports in the continent.
