Comment on “Changing C hina, Changing A frica: Future Contours of an Emerging Relationship”

Abstract

Davies et al. (2014) describe China's engagement in Africa and indicate its intention to shift some parts of manufacturing from China to Africa.The possibility of a transfer of production capacity, especially of low-ended and labor-intensive manufacturing sector, from enriched China to Sub-Saharan Africa has been seemingly envisaged and incubated jointly by China and the World Bank.Many watchers of "China in Africa" share the common observation that China's policy toward Africa has many similarities to Japan's "economic cooperation policy" in the 1960s and 1970s toward Southeast Asia.In Japan's case, the final consequence of its policy was, maybe unintentionally, to allocate production capacities from Japan to other Asian countries.Especially after the Plaza Agreement in 1985 that resulted in a large appreciation of the Japanese yen, Japanese manufacturers were deprived of competitiveness and emigrated in search of cheaper production inputs.That movement initiated the formation of the Asian regional economy with integrated value chains.This history indicates that it is not startling for China to put its policy goal as a production shift from China to Africa.However, in my observation, China now faces difficulty in attaining that purpose in spite of the limited success of some special economic zones.It is widely said, and also Chinese people may think, that the economic circumstances in Africa are not suitable for manufacturing in various aspects, namely, power supply shortages, insufficient infrastructure, and others.Above all, high production costs including labor should be the most crucial aspect.According to surveys done by the United Nations Industrial Development Organization, the average wages of the manufacturing sector in Sub-Saharan African countries have been historically higher than in their Asian counterparts.For example, the average wage in Kenya's manufacturing sector was $3322 (2010) higher than Thailand's $2233Thailand's $ (2006)), whereas the per capita gross domestic product (GDP) of Kenya is $792 much lower than Thailand's $3116.The huge divergence between high wages and low per capita GDP is found generally in Sub-Saharan Africa.For Japanese manufacturers, therefore, the destination of any production shift is inevitably directed to Asian countries, currently Vietnam and Myanmar, for example.In the case of Hong Kong companies responding to the US policy of African Growth Opportunity Act, they

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