Building a leading area for in-depth economic and trade cooperation between China and Africa is one of the three major tasks of Hunan Pilot Free Trade Zone (FTZ), which continues and sublimates the efforts to hold a successful China-Africa Economic and Trade Expo (CAETE) and establish a long-term mechanism of China-Africa economic and trade cooperation.
The construction plan of such a leading area involves several reform issues, including "building the Africa Non-resource Products Distribution and Trading Center in China" and "encouraging the barter trade between China and Africa", aiming at solving the underlying problems of the mechanism of China-Africa economic and trade cooperation. It is an innovative move under the framework of South-South Cooperation, taking into account the provincial, national and international situations, demonstrating Hunan's wisdom. With the CAETE and the leading area for in-depth economic and trade cooperation between China and Africa as two business cards, and by giving full play to the advantages of "the expo and the leading area" in talent attraction and pooling, Hunan will surely become a new focus of China-Africa economic and trade cooperation and rise via opening-up with a higher standard. This is of great relevance for sharing with African countries the fruits of China's thriving economy and building a China-Africa community with a shared future.
The construction of the leading area for in-depth economic and trade cooperation between China and Africa is a complex systematic project, involving sectors such as economy and trade, foreign investment and foreign trade, over 50 African countries and Chinese provincial-level administrative regions, processes related to customs clearance, logistics, transaction and settlement, services concerning information, finance and insurance, platforms including Hunan Gaoqiao Grand Market, Changsha Huanghua Comprehensive Bonded Zone and Yueyang Chenglingji Comprehensive Bonded Zone, and the departments of commerce, development and reform, finance and other departments. In order to turn "business cards" into "reputation", "blueprints" into "actions" and "policies" into "results", we must hold to the most important things and bring forth new ideas, and pool and coordinate efforts of different parties to accelerate the construction of the leading area.
Focus on "dual circulation" and "community of shared future for mankind" as trends of the times
In the face of the change of principal contradiction in domestic and international circulations, China has created a "dual circulation" new development pattern with the domestic circulation as the mainstay and domestic and international circulations reinforcing each other, highlighting the leading role of the domestic circulation and its guidance for the international circulation. The new pattern encourages international circulation to involve more developing countries in a more balanced manner. General Secretary Xi Jinping has pointed out on the Extraordinary China-Africa Summit on Solidarity against COVID-19 and other occasions that it is necessary to build an even stronger China-Africa community with a shared future.
Under the new pattern, the in-depth economic and trade cooperation between China and Africa should focus on "six transformations": first, transform from "blood transfusion" to "blood creation" in terms of economic and trade cooperation with Africa; second, transform from a pattern dominated by state-owned enterprises and large enterprises to the one jointly participated by local governments, state-owned enterprises, large enterprises and small and medium-sized enterprises; third, transform from focusing on hardware construction to promoting hardware and software construction simultaneously; fourth, transform from focusing on the import of bulk mineral resources and products to encouraging the import of non-resource products and enhancing the long-term export and development capabilities of African countries; fifth, transform from complying with the existing economic and trade rules of WTO and other international organizations to exploring more practical economic and trade governance rules; sixth, transform from making China-Africa economic and trade cooperation a success to forming replicable and transferable experiences and telling stories of China-Africa economic and trade cooperation.
Be fully aware of the key factors restricting the in-depth economic and trade cooperation between China and Africa
The sovereign states on the African continent have different national situations, but most of them suffer from foreign exchange shortage, strict foreign exchange control, high public debt, high political risk, high customs clearance cost, a distinct tendency towards local protection and other problems. This greatly restricts their development in foreign trade, foreign capital and foreign trade economy. Also, China faces practical difficulties that the money earned in Africa can't go back to China. Meanwhile, China's international aid policies, trade policies and investment policies to Africa are not fully integrated, failing to form a joint force.
Take China's import of African non-resource products as an example, the major constraints are as follows. First, there's not enough access to information. African countries have high-quality natural agricultural products, but China is not fully aware of it, let alone the related brand building. Second, Africa's production and supply capacities are inadequate. For example, the processing and conversion rate of African agricultural products is not high, and there is a lack of a stable supply. Third, China has set stricter market access thresholds or higher import tariff rates for some African products than European and American products, so cashew, rubber and other products have to be processed in Southeast Asia and then exported to China. Fourth, Hunan has not formed a special channel for trade with Africa, and the scale and products of import and export trade are asymmetric, resulting in higher logistics costs. Fifth, the supporting system is not perfect, and there is a lack of Chinese and African talent in economic and trade law and an international commercial arbitration mechanism.
Actively exploring innovative measures to deepen China-Africa economic and trade cooperation
The construction plan of FTZ presents a package of innovative measures targeting the key factors restricting in-depth China-Africa economic and trade cooperation. For example, it builds the China-Africa Cross-border RMB Center and China-Africa Barter Trade Platform to promote the resolution of the restriction on large-scale economic and trade activities due to foreign exchange shortage or control. It promotes Authorized Economic Operator (AEO) mutual recognition at Chinese and African customs to improve the efficiency of customs clearance. It builds a distribution and trading center for African non-resource products in China, which helps expand the import of non-resource products and increase the foreign exchange earnings of African countries. It sets up a China-Africa Passenger and Freight Distribution Center to lower the cost of trade logistics in the Hunan-Africa trade. It also coordinates resources related to the aid to Africa and expects to build a new model of "foreign aid + economic and trade".
Meanwhile, it should explore and promote reforms and innovations such as the China-Africa Economic and Trade Online Expo, in-depth cooperation of cross-border industrial parks, construction of overseas logistics warehouses, goods-for-investment cooperation, conditional tariff exemption and special export credit insurance so as to effectively break the key barriers to China-Africa economic and trade development and form a new model of South-South economic and trade cooperation that can be replicated and promoted.
Coordinated efforts to build a China-Africa economic and trade cooperation platform
The leading area for in-depth economic and trade cooperation between China and Africa is not only Hunan's platform but also China's and the world's platform. Coordinated efforts are needed for its construction.
First, the think tanks of international organizations and colleges and universities such as the China-Africa Economic and Trade Cooperation Research Institute should be fully used to make institutional innovations that are internationally competitive. Second, the China-Africa Economic and Trade Cooperation Research Society should play a full role in developing more precise policies and measures based on the successful experience and actual difficulties of economic and trade enterprises doing business with Africa. Third, the cooperation with Zhejiang, Guangdong, Beijing and other major provinces and cities in China-Africa economic and trade cooperation should be strengthened. Fourth, the central role of the China-Africa Economic and Trade Promotion Innovation Demonstration Park should be highlighted with a focus on the development of Yueyang Chenglingji Port, Yueyang Chenglingji Comprehensive Bonded Zone, Changsha Huanghua Comprehensive Bonded Zone and Changsha Jinxia Bonded Logistics Center. Fifth, the respective functions of finance, tax, development and reform, commerce, banking and trade associations should be fully developed to so as to form a good atmosphere for multi-department cooperation, extensive consultation, joint contribution and shared benefits of the leading area for in-depth economic and trade cooperation between China and Africa.
(Written by Xiao Hao, Vice President and Professor at the School of Economics & Trade, Hunan University and Deputy Secretary-general at China-Africa Economic and Trade Cooperation Research Institute)
Source: Hunan Today
