In his keynote speech at the special Summit on China-africa Solidarity against coVID-19 on June 17, Xi said China supports the establishment of a free trade area on the African continent.
What is the charm of the Free trade zone on the African continent for Xi Jinping to support by name? How will its construction affect China-Africa cooperation?
Plate by plate: The world's largest free trade zone
In June 2015, AU member states launched negotiations on a free trade area on the African continent. On 21 March 2018, the Fta agreement on the African Continent was adopted in Kigali, Rwanda and signed by all countries. On May 30, 2019, the Free Trade Area Agreement on the African Continent officially took effect. On July 7, 2019, the 12th Au Special Summit announced the official launch of the free Trade Area on the African continent.
In terms of number of members, the African Free Trade Area will become the largest free trade area in the world, and is expected to form a large market covering 1.2 billion people with a combined GDP of us $2.5 trillion.
The establishment of the Free Trade Area on the African continent is an important milestone in the process of African economic integration. President Of Niger Issouf said that "the establishment of the Free Trade Area on the African continent is the most important event since the establishment of the African Union" and the development of the free trade area will "further stimulate the economic potential of the African continent, promote resource development and create more jobs". "The fta will bring great development opportunities to Africa." Mwangi Wagira is a Kenyan economist who used to work at the World Bank.
Count them: There are plenty of opportunities
In recent years, China has become Africa's largest trading partner, and China-Africa economic and trade cooperation continues to heat up. The establishment of a free trade area on the African continent will have a far-reaching impact on China-Africa cooperation.
On the whole, the establishment of the FREE Trade Area will form a unified investment and trade policy across the African continent, which will be conducive to the implementation of the top-level design of China-Africa cooperation and facilitate China's more convenient and efficient cooperation with the entire African continent.
In specific areas, the integration of African free Trade area will provide more opportunities for the further expansion of China-Africa economic and trade relations.
First, the trade structure between China and Africa will be further improved. With the free flow of goods, people, services and capital across the continent, African countries will enhance the specialization of labor and the deep processing capacity of products, and promote the production and export of Africa's high value-added products. This is undoubtedly conducive to improving Africa's single economic structure, thus optimizing the structure of China-Africa trade.
Second, The momentum of Chinese investment in Africa is likely to be more positive. The establishment of the FTA will help remove barriers to Chinese investment in Africa and reduce the cost of Chinese products, personnel and capital entering African markets. Meanwhile, with the development of African integration, industrialization and urbanization and the growth of the middle class forming a virtuous circle, many aspects of African countries are in urgent need of construction, which will bring more business opportunities and benefits to Chinese enterprises investing in Africa.
Third, the space for cooperation in infrastructure construction has expanded. If Africa is to develop free trade zones and achieve economic integration, it must improve its backward infrastructure systems. Under the framework of the One Belt And One Road initiative, infrastructure construction represented by roads has been extended to the African continent. The opening of the mongolia-mongolia railway and the yaji railway shows that China is using its actions to boost the industrialization and integrated development of African countries. The establishment of free trade area will undoubtedly further accelerate the process of infrastructure construction.
Finally, we will promote china-africa production capacity cooperation. The establishment and integration of free trade zones will promote industrial agglomeration, extension of industrial chains and growing economies of scale in Africa, which will create more opportunities for china-africa cooperation on production capacity. By transferring China's superior production capacity to Africa in the form of industrial chain, China will not only relieve the pressure brought by the upgrading and adjustment of domestic industrial structure, but also improve Africa's manufacturing level and Africa's position in the global value chain.
Stand up to the challenge
However, there are hidden worries behind the opportunity. African countries differ greatly in ethnic, religious, natural resources, level of economic development, laws and regulations, which hinder connectivity and economic and trade exchanges among countries and hinder the in-depth integration of the entire African market. There are also issues such as policy incoherence resulting from the change of political parties and security risks arising from internal armed conflicts; As well as constraints such as the imperfect cross-border banking network and financial services, china-africa cooperation will face challenges.
In addition, the establishment of free trade zones on the African continent has raised higher requirements for China-Africa cooperation.
On the one hand, the overall planning capacity of China-Africa cooperation should be raised to a higher level. Under the previous cooperation model, China's policy towards Africa was often framed, and specific cooperation projects and measures were often reflected in bilateral cooperation. But in cooperation with the continent as a whole, misguided policies will have a greater impact, and the room for trial and error in China-Africa cooperation will be compressed. The formulation of some non-sexual measures should be richer and more specific, and more attention should be paid to advance research and pre-evaluation of results.
On the other hand, after the establishment of the FTA, China's similar trade and investment projects in different African countries will be replaced by the fittest, which will pose great challenges to financial institutions, investors, traders and contractors. This will require the Chinese government to actively restrain and guide the subject of China-Africa cooperation so as to avoid vicious competition in the same industry.
In addition, a more accurate assessment of the stage and degree of African integration development is needed to make a more accurate development plan. China-africa cooperation should fully assess and respond to the phased changes in the process of establishing the FREE Trade Area. Take e-commerce as an example. At present, the African market is fragmented, with many policy barriers and poor logistics conditions. It is very difficult to form a unified e-commerce market. Therefore, China-Africa e-commerce cooperation still needs to develop different development strategies for regional markets.
