China and Africa jointly address structural transformation

Excess production capacity has been a prominent problem in the Chinese economy since late 2012, and the demographic dividend has also been dwindling. At the historic Third Plenary Session of the 18th Communist Party of China (CPC) Central Committee last November, the Party authorities put forward an outline for comprehensively deepening reform, and committed to adjusting the economic structure to seek sustainable development. In other words, China is looking to transform the current economic model of prioritizing production capacity over efficiency and preferring exports over domestic demand to a new model, depending more on domestic demand. This is set to change China's industrial structure and the direction of its development, and impact a range of areas such as the demand for energy and raw materials and the prices of finished goods that implicate various African nations.

The labor force in Sub-Saharan Africa is currently increasing by 11 million every year. By 2030, Africa's urban residents will account for 50 percent of its entire population, its labor force will reach 1.1 billion, and its consumer population will peak at 2 billion. As Africa is set to become the world's largest market and source of labor, its people are enjoying a rising purchasing power. An increasing number of African nations are not content with being merely the raw material supplier and market for industrialized and emerging economies, but aspire to embark on their own industrialization and modernization causes. They are increasingly unsatisfied with mere aid and investment, or exchanging resources for foreign currency, which is in turn spent on manufactured goods. Instead, they hope foreign investment will help create new industries and jobs.

If China and Africa manage to address their structural transformation properly, the current win-win and complementary trade relations between the two sides will be elevated to a new relationship based on reciprocity and mutual benefit. Otherwise, Sino-African trade relations will be challenged and this will continue to cast a shadow on their friendly relationship.

In addition to raw material and markets, China also needs an outlet for its excess production capacity, and a substitute for its vanishing demographic dividend. Africa, on the other hand, needs more foreign help to overcome the bottlenecks in its infrastructure, public services, labor quality and industries. China and Africa therefore have a good foundation for achieving a structural transformation together.

As Premier Li said, it is the mutual wish for China and Africa to explore a more beautiful future for China-Africa cooperation. To achieve this, both sides need to aim higher and plan for the longer term instead of focusing only on current projects and contracts. Therefore, though the cooperation agreements signed during this round of state visits are important, the readiness of the two sides to jointly address structural transformation is more noteworthy.

The author is a researcher of African issues from the Far & Wide Journal.

The article was translated by Zhang Lulu. The original unabridged version was published in Chinese.