 Okay, great stuff. Are you all comfortable? Okay, good morning, ladies and gentlemen. Thank you very much for joining us this morning in the debate China-Africa relations. I think the central question we're asking here this morning is whether or not China's growth is going to be a differentiator for Africa. We do know that China's been paring away before the credit crisis at somewhere between 10 and 12% GDP. That number's receded, but it's still phenomenally high at around 8% GDP. Yes, there are threats now of global inflation creeping in, and we're seeing monetary policy tightening in China, and we're also hearing some experts say the Chinese economy is overheating. We'll debate the merits of that in just a few seconds, but basically what we're trying to establish is that phenomenal growth rate in China does it have significant bearing for Africa? For African goods accessing China, for African goods being bought by Chinese consumers, and also for Chinese investment in Africa, where we know that for many African countries, China is now the number one trading partner. There are a lot of issues that have been raised internationally and diplomatically as to the ethics of China's involvement in Africa. Are they really an emerging market? Are they, should they be classified as a fully developed economy? And with that, together with the fact that they're also a member of the UN Security Council, should they be playing a greater role in terms of conflict resolution in Africa? So we're gonna talk to a range of those issues, China's responsibilities, China's role, and China's benefits for developing Africa, and just moving Africa to a higher level. Let me introduce to you the panel. To my left is the Minister Rob Davies, who's the Minister of Trade and Industry here in the Republic of South Africa. Seated next to him is Richard Dalden, who's the Director for the Royal Africa Society in the UK. Seated next to him is also the Honorable Deputy Prime Minister of Ethiopia, and also the Minister of Foreign Affairs, Hailey Mariam Desalen. Seated next to him is Melina Mohoto, who's the Governor of the Bank of Botswana, and also a Co-Chair for the World Economic Forum, Africa 2011. Seated next to her is Ambassador Louis Guijin, who is a Special Representative on African Affairs in the Ministry of Foreign Affairs for the People's Republic of China, and last but certainly not least is Martin Davies, who's the CEO of Frontier Advisory Services, and also a young global leader here at the World Economic Forum. So I'm gonna start off with the central question, and I'm going to ask our panelists to please answer this question in no more than 30 seconds. I am a journalist. I am an anchor. I can be very strict on time. So, Minister Rob Davies, will China's growth be a differentiator for Africa? Well, I think that China's growth has created fantastic opportunities for Africa. We have a new partner for investment and trade relations. It's a dynamic force in the world economy. It's fueling a mineral boom. There are also a number of challenges that China is a competitor for a number of our value-added sectors. I think the relationship is at a point where we shouldn't just be conceiving of a quantitative expansion of what we have already, but also how we are going to make some qualitative shifts so that the partnership with China begins to contribute to much more value-added activities on the African continent, and I believe that really it's up to Africa to be much more active in trying to set the terms of that new relationship. Thank you very much. Richard Darden. Yes, China has been the main driver of growth in Africa in the last 10 years. Economically very good for Africa, politically problematical, particularly because of governance. The lack of transparency is problematic for Africa. The deals in Africa for China, one big mega-dealer, one by one there is no coordinated Africa policy from the African side, not even regional. And I think the government-to-government non-interference is also problematic because in Africa, whatever they say in the capital, when you get down to the local level, they may do things differently and there may be different power groups down there. And I think China is having to learn that and actually get beyond the government-to-government thing and deal with the local level. Lastly, most Western companies will have Africans in very senior positions, but Chinese companies do not. And I think that is going to be a long-term problem. Please let me know, anybody who finds the first African boss of Chinese workers in Africa. Okay. Deputy Prime Minister. I think the relationship between Africa and China is moving in the right direction. And then it's in the right track. The basis for this relationship is on equality, mutual benefit, mutual respect, non-interference to the internal issues and there is no policy rent that you need to focus on China, the relationship between China and Africa. So I feel that it is in the right track. Okay. Melina. Thank you. Well, I'm looking forward to unpack what I'll be saying in the next few minutes during the course of our interface. But for me, I would like relations between Africa and China to continue to be reflective of the comparative advantage where commodities are exchanged for, if you will, infrastructure building and manufactured goods and so on and so forth. What we have to make sure we are adhered to and uphold are the lofty ideals of the new Africa policy, which enshrines equality, prosperity, sincerity and mutual benefit. Thank you very much. Ambassador. Well, I think the basic character of China-Africa relations is equality and mutual beneficiary. Both the continent and China benefits from the strong engagement of China with this continent, Africa. China offers more options to Africa. China contributes in the past few years to more than 20% of the African continent's GDP growth rate and China is determined to further advance and enhance that relationship with that continent so that the whole world, particularly developing countries will benefit accordingly. And Martin Davis. Thanks, Lereta. China's growth phenomenon and capital provision to this continent provides the greatest opportunity, developmental, economically-naming opportunity for this continent in economic history. The, it was said yesterday that macroeconomic stability is driving growth in Africa. I disagree. The primary driver of growth this continent for the last decade, as Richard mentioned, has been China's demand for resources. I feel that we're becoming almost drunk on growth in Africa at six, seven percent plus, where effectively the drivers of this growth are not truly internally driven through microeconomic implementation of policy or more agile sort of economic planning and delivery. It's more being driven by external factors in China. Every African government should be obsessed with China's fixed asset investment spend, which currently is six at 48% of GDP. That is driving African growth and it's a resource story. Let's start off with a component of China-Africa relations in the area of trade. And I'd just like to point your attention to just some statistics. Recently, obviously you see the dip in 2009, speaks to the global credit crisis where countries across the developed and developing market space were affected. But in 2010, we're seeing the trade figures rising almost being at par with the heightened figures we'd seen in year 2010. Just taking a look at what sort of products or regions are providing China with inputs Angola, Sudan, South Africa, speaks to commodities. China has been very active in investments in terms of extractive industries, but also very much in terms of African exports to China. As Martin has just said, commodities, as Lena Mahoto has also said, the question now is when are we gonna move beyond the commodity story? And on that note, I'd like to pose the question of China's trade relationships with Africa. Minister Rob Davies, definitely Africa's profile in global trade has grown because of greater South-South relations, because of greater relations between China and Africa. The criticism is it's skewed in favor of China and it's worrying that it's still a commodities-based relationship in terms of what Africa provides. Yes, I think that's the challenge, I think, for the next phase as we move forward. Just on the quantitative side, and speaking for South Africa, between 2006 and 2010, we actually saw a four-fold increase in our exports to China, and we're roughly a doubling of our imports so that the actual gap has been narrowing, although it's still there in China's favor for us. But I think that the issue that we've raised is the composition of that trade. Our number one export to China is iron ore and it's been followed by a list of other mineral commodities. And our leading import from China is cell phones and then it's a range of value-added products. That is the pattern. And I think that what is interesting and important is on a bilateral front, we have actually had an agreement with China as part of our comprehensive strategic partnership agreement. The China will work to change that pattern, that they will work to buy more value-added products in South Africa, they will work with us to invest in beneficiation of mineral products at source. They've agreed on both of those as important principles. I think right now China has got some things which are fairly unique. They have an import policy. Not too many countries have an import policy. They have a consumption policy. And I think this is all part of growing their own domestic market. Now, how can we get in on that and change the terms of that relationship? This is what I think I was saying earlier on, that these challenges, I think, are not unique to South Africa. They're not uniquely bilateral. They're actually things that are confronting the African continent as a whole. And I think that we need to become involved in a much more active dialogue. And I think because China is a developing country, to get to one of your other points, it is a developing country, despite the fact that it's had impressive GDP growth. They know the challenges of development. They understand that. And they've been working with us in international fora around a lot of these issues. And I think that I'm optimistic that we can construct a new partnership which is based on taking us to the next level. Minister Desalene, what's the Ethiopian experience? We're talking about China being interested in African commodities. Have you benefited as Ethiopia? I think it's not always true that China focuses on extractive sector. If you take Ethiopia, I think we do not have that much extractive sector. But we have a very good trade relationship between us and China. The only problem is our capacity to utilize the opportunities that has been opened for Ethiopia. Otherwise, it's not based on extractive sector as is in some parts of Africa. But when it is totally say that China is only focusing on resources. But even if this is the case, I feel that as far as Africa is able to negotiate properly and as South Africa said, to have a strategic partnership which is win-win and benefiting Africa and our position to negotiate and get our benefits out of the relationship is very important. So I think the trade relationship between it is true that it's used towards China but we need to work our domestic capacity to compete in the global setting, not only in China but in general. But in Chinese case, I think this needs to be worked out from domestic out. Ambassador Liu, we've just seen a graph up there that basically says that the imports leaving Africa going to China come from Angola, Sudan. It just speaks to the oil and energy issues, the resource issues, the commodities issues that we're talking about. That's what it looks like statistically that the Chinese are only interested in African commodities. Well, yes. The structure or composition of China-Africa trade relationship is not that desirable or ideal at the moment but that is not something unique with China. If you check carefully about the trade structure between the continent and the United States of America and the EU countries and Japan, that is nothing different. Africa sold well the overwhelming majority of their products and commodities to those developed countries. So that is why we need to work together. China, the developed world and African countries to try to diversify the structure of the trade, the economy of the African continent. So the African government's needs to use properly the revenues from the commodities to diversify their economic structure. And also China's import from Africa does not necessarily come from only Zimbabwe, Sudan, Angola, it comes from every African country. And that is not the case that China is only interested in commodities, minerals or energies. China imports every year, it's around 10% of the oil from the continent. But the other 30% more to Europe or another 30% more to the United States of America. So that is the world phenomenon, that is the need for us to work together to address the problem. China is more than willing to do that and China has already done something and will do something more, try to promote industrialization, try to invest more in Africa, try to come into partnerships with small and medium sized industries, all sorts of things, thank you. Okay, just before I ask our panelists to comment, I'd like to show you another slide in terms of the exports leaving Africa going to China. As you can see, they're the major providers of African goods into the Chinese market, South Africa, Nigeria, Egypt and Algeria. Now these are obviously the first three of the largest economies in sub-Saharan Africa, some of the more diverse economies in sub-Saharan Africa, but Nigeria being the eighth largest producer of crude oil in the world, again reinforces this conventional argument. The kinds of products in terms of the two way flow, the Chinese goods that are entering Africa tend to be manufactured goods, particularly within the mechanical and electrical components. It tends to be textiles, that's a very sensitive issue, just yesterday we were talking about how here in the Western Cape, an entire textile industry has been decimated by what's termed as Chinese dumping of textile products, but it tends to be manufactured goods leaving Africa going to China. It tends to be mineral products first, so copper and also platinum and oil and then also things like parts for vehicle manufacturing and we know in South Africa that's also another one, manufacturing being one-fifth of the economic output, we need to boost that, that's also where we need to create jobs. So basically that's sort of how things look by way of the composition and the country profiles. Melina Mohoto, let's get your views on this one. A greater China-Africa relationship, does it force us to elevate our game? It's all easy for us to lambaste China and say they don't act with the greatest goodwill, but will it force us to really look at ways of making our economies more dynamic, more diverse and pushing up volumes? Oh yes. I made reference earlier to the new Africa policy, which as I indicated has these three, four ideals. What we have to do is to make sure that when we get to the table of entering into a relationship, be it trade or anything with China, it has to be reflective of what I said earlier, comparative advantage. It also has to be reflective of mutual understanding. Invariably, different African countries will not necessarily be following what is now referred to as the Angola model because the requirements are different. And therefore, when we get to the drawing board, we have to make sure that our interests are also taken care of without necessarily taking advantage of China. I don't think China is going to allow itself to be taken advantage of in the first place. But what we also have to guard against is to replace Western monopoly with what one could call Chinese mechanicalism because I believe that the lessons we learned in the very first classes of economics where we were advised that monopolies are unhealthy, we always have to remember that. What I also want us to take advantage of is that there's nothing wrong with cheap goods. Every strata of society would like to be able to access those goods, including the poor. And we also have to embrace the thriving China towns which are a significant feature of the largest cities, some of the largest cities in the world. So we should embrace that. But last but not least, we also have to embrace financial aid coming from China because quite frankly, it will fill the gap that has been left for many years by Western financial assistance. We'll talk about financial aid in a second and we'll talk about investment strategies. Let's continue to talk about the trade relationship, Martin. Are we being unduly paranoid about China's involvement with Africa? I mean, they are now effectively the largest trading partner for most African countries. They've given many African countries that will marginalize access to new markets. And they've helped in many ways to drive up investment and GDP. Thanks. A couple of things. Is the China price resulting in deindustrialization or non-industrialization of our continent? I think in deindustrialization, potentially particularly in South Africa, however, look at Southeast Asia. 10 years ago, the Southeast Asians were a similar sense. We cannot compete. It's not so much how much we, how we'll be able to compete or how will we survive this onslaught of the China price effectively? Southeast Asia is repositioned. We talk a lot about the textile garment sector in this country. I was in Thailand recently. 80%, 80% of all garments, clothing, sold in Thai retail stores are procured locally in Thailand. What is Thailand doing in Southeast Asia in the economic neighborhood of China to remain competitive and industrious in the face of Chinese competition? I think from our perspective in Africa, the more we start to talk about China, the more we start to talk about ourselves, perhaps. But the global cost of labor for manufacturing is being set in China. The global cost of services is being set in India. I think we, and it comes back to what I said earlier, we have robust growth rates in this continent, very robust, 6% plus this year forecast. But we're having, unlike Asia or even Latin America, we're having robust growth. We're having declining competitiveness. Now, this is a concern. Is it Chinese competition? Well, it's not Chinese competition. It's competition from China. The bulk of the US trade deficit comes from US multinationals procuring in China and selling back to the US home economy. So we must differentiate between Chinese competition and competition from China. China's creative is very competitive manufacturing platform. It's the global economy coming to us to the medium of trade, which we have to compete. Richard Nardin, I want you to add your voice here. We often speak of a great partnership with China. But Martin's just underscored competition, semantics aside. We are competing with a country that has a critical mass in terms of labor, that has a currency that is manipulated, that has huge volumes when it comes to exports. Yeah, it's true. Why should China change? Even if this generation of Chinese workers move up the chain, as is normal, there is, as I understand it, another whole supply ready to come in from the rural areas in China to take their jobs at the very low price. I can't see how the rest of the world can compete with China for at least another 20, 30 years, if that's true. And why should they? Even if they want to, even if, as Ambassador Liu Guijin says, we'd like to have a more benefit for Africa, can they actually deliver it? Because can they control China's exports of goods? They're wonderful for African consumers. I mean, the first time anybody owns a radio, a watch, a mobile phone, they're made in China. But for Africa, the long-term position for me for African manufacturers, it's going to be extremely difficult for them to get into the global market and compete, not only with China's products, but that fantastic work ethic as well. Minister Rob Davies, I mean, you unveiled the Industrial Policy Action Plan for South Africa, heavy emphasis on manufacturing, heavy emphasis on labor-intensive industries. It's very important to get South African goods produced in high volumes and to the international market. Can we really compete with the Chinese? I mean, Nina's just spoken about comparative advantages. Can we really establish those? Well, I think the point is one of the things that we need to learn from China is that China's efforts to develop have been driven by manufacturing. And if we let manufacturing go, then I think we're not going to be able to consolidate on the boom which we have here now. We can't live forever on the basis of a mineral boom. We have to consolidate that into value-added production. Now, I think the point that's being made about from China as opposed to Chinese action, I think is a real one. It's quite often it's our own decisions. Are we just going to willy-nilly just resign ourselves to cheap imports from China or are we going to try to compete and are we going to defend our space to do that? And I think that's the issue where Industrial Policy comes in. And I think that, as I said before, a lot of the things that in terms of defining a new kind of relationship with China, because I do think we need now to address the qualitative dimensions come from what we do in Africa. And I think that if we indicate very clearly, we are on a path of industrial development and that we want that to be a very significant part of setting the terms of the engagement with China, I think that's something which at least look, we get a good hearing from China on that. They understand us on that. But I think that it's quite often for us now to follow through. I mean, for example, the mineral boom, African ministers of industry have said that one of the next drivers of the next phase of industrial development in Africa must be to beneficiate mineral products. We need actually be transforming mineral products from we not dirt out of the ground, but some at least stage of transformation of those products in our own countries. And I think that if we start to set the terms that Brazil has done it, they've negotiated with China long-term supply contracts versus investment, for example, in steel plants. If we enter those kind of negotiations, then I think we can push the relationship up the value chain. That's what we need to do. And as I say, I think a huge amount of the responsibility now is falling on us as Africa. China is not gonna be a father Christmas anymore than the EU or anybody else, but I think that it has a different approach to a partnership in one, which I think is potentially much more positive than we've had with our traditional trading and investment partners. And then also, as the governor from Botswana said, and I agree with her, it's no longer a monopoly. We now have choices. And I think it's how we play those choices that's going to determine our future. Can I just butt in there? I mean, have you met with your other African ministers to deal with this and said, let's work out an Africa-wide strategy, even a SADEC strategy? Well, I think that there are some discussions on that. I think those discussions are not as advanced as they need to be. I think that, I would agree with that. That the more we can come together as Africa, the more we can define a common set of objectives and positions around at least some of the issues, like minerals' beneficiation. At least those of us who are producing minerals, exporting minerals, can we not come up with a common platform? As I said on a bilateral basis, China has agreed with us that they need to move much more in that direction. Can we now generalize that into more of an African position? I think if we can, I think we'll make more headlines. A final question on this issue of trade. Ambassador Liu, and I'm going to be an American now without the accent. The concern that America's raised is the issue of a currency that artificially supports exports and just generally China not playing fair. Respond to that perception and then tell us, in terms of international trade, what you're going to do to sort of comply to WTO standards and regulations so that at least it's a more equitable playing field. I think currently this monetary system is not that just and fair. Well, simply to blame China on that and just and fair, monetary system is not that fair. And actually we from China and the United States of America and the developed world have been engaged in intensive discussions. And it is also the concern from BRICS countries so that the developing countries, the emerging markets should have a more say in trying to modify and reform the existing monetary system so as to give more representation in those international institutions. And talking about the value of the Chinese currency against the U.S. dollars and other major foreign currencies, I think something has already been discussed and something is already on the table that kind of more balanced approach will be introduced in this area. I think the currency issue is one of the issues related to everyone, every country, every economy, and needs us to work together to have through mutual compromises and through mutual accommodation of each other's interests through the long-term view of building just the balance, the system, so that everywhere we'll benefit and China will equally also benefit from that. All right, I'd like to introduce the subject of China's investments into Africa, Governor Lina Mohorlo. China is invested at over $100 billion in Africa, as I keep on saying, it's now become one of the largest trading partners for at least 10 or 15 African countries. You mentioned earlier the Angola model. And for many people, the Angola model, certainly for me as a journalist, I understand that as investments in exchange for commodities, soft loans and concessions in exchange for resources, and many are questioning the sanity of that, many are questioning the sustainability of that. Are you questioning it? Not necessarily, because in my view, although there is the Angola model, I would like it to work for Angola. And I wouldn't want it to be necessarily replicated in other African countries, because as I said earlier, the needs and requirement will never be identical. That's one thing for sure. Again, the other thing is, as much as the Angolans will have identified an opportunity in their model, I would like all of Africa in as different as we are because of varied economic development and patents. We should also view China and its investment as an opportunity. Let's avoid getting excited in the way that I want to believe we did with the Asian and Tiger countries when we wanted to copy but not learn from the experience and make sure that we pick the good out of our relationship with China. And if it means that we sell to China our commodities in exchange for what China would like to do for us, let's do so from a mutual, beneficial perspective rather than at the end of the day, then blame China for having exploited us. Martin Davies, I'd like you to add your voice to that. When the IMF come to Africa and they look at fiscal budget support, they are conditions. The world bank the same. And the argument is the Chinese are not looking at the bigger picture. They're not looking at systemic risks. They will do whatever it takes to get their hands on those commodities, even if they lend in very, very favorable terms that are not sustainable going forward. I half joke is maybe the IMF stands for I'm fired these days. But the Sangola model or more accurately the concessional finance model, this is a, you know, it's impossible to replicate because of the political economy of decision-making in Beijing as to how this capital is allocated. It's long-term, 15, 20 years, extremely low interest rates, large debt write-offs, roll out of infrastructure and exchange effectively for mortgage commodities which will pay off that debt over a period of time with the risk of that transaction being underwritten by Beijing's policy banks, i.e. Exxon Bank and increasingly China Development Bank in Africa. What the trend going forward from this is, and clearly on those terms, one could argue, it's certainly more developmentally minded perhaps than traditional private finance for the continent because it was appetite for risk. I think going forward is that we will see the likes of AFDB, the IDC, the DBSA, and often I hear perhaps there hasn't been enough D in the DBSA or DMIDC lately, but their financial models will have to change in order to, dare I say, compete but start to mimic the financing mechanisms from China which have worked so well in the Chinese economy but now are starting to come to Africa. Deputy Prime Minister, infrastructure, when I was in Kenya recently, and I know it's not Ethiopia, we saw lots of roads being built, bridges being built by the Chinese and there's a sense that this is what China is offering Africa. The infrastructure that is a deficit, that the government are finding difficult to finance, they'll finance it in exchange for those raw materials. I think if you see the Chinese investment in infrastructure in Africa, especially if I take an example in my country, and it's a very important step forward because infrastructure financing is very difficult in other parts from the West now and the option for Africa is now becoming China so I think this is a very important step forward. We have to appreciate, but how do we use this approach? Is it that the Chinese contractors come in and work in Ethiopia or in other African countries, construct and go back? I think the model has to change. We have a strategic partnership, agreement where the Chinese companies, when they come to Ethiopia, they have to build the local capacity where our engineers and our contracting firms and consulting firms will be engaging with the Chinese counterparts and therefore the local capacity will be built and in this way, we can have a sustainable infrastructure development for the future of Africa so I think it's very important that the Chinese come in because we have deficiency in terms of capacity to go on the infrastructure. How do you respond to people who say infrastructure is a basic social public good? African governments must provide their own infrastructure. That's the responsibility of the state. I think Africa is not competitive because the problem is with infrastructure. I mean, energy problem everyone knows so Africa cannot compete in the global setting if there is no proper infrastructure in place and we cannot have a vibrant private sector if there is no infrastructure in place so I think this support has to be very much critically seen. You raised the issue of IMF and I think this is very important for Africa. For the last 30, 40 years, there has been a number of prescriptions but they didn't work. Now Africa is emerging because these kind of restrictions are now loosening because of the emerging balance of power in the global setting. So I think this has to be appreciated properly that the Chinese support is not coming with tags of conditions. It's coming with, I mean, it's free of conditions. It doesn't mean that if the Africans themselves are not ready to finish their homeworks, then it doesn't mean that it will be always effective but from Africans it's needed to have a very commitment from the leadership and that's also very important aspect. You want to share. Yeah, I think the question of using revenue from minerals against infrastructure is not a irrational choice. It's something which would be a reasonable long-term use of your benefits from mineral revenues. I think the question is where is that infrastructure being created and what's it for? I think that what we need to make sure and we need to take stock is that one of the big challenges for Africa is actually to grow our internal market and trade between African countries. Now if the infrastructure is just improving a whole series of corridors taking raw materials from the inland to the sea, that's not going to help us in that regard or if it's going to improve some social thing but it's not going to contribute to productive activities. I think that's the issue and perhaps what we, this is again where bigger African ownership I think is important. And then the other point I would make is that just on the currency it's not a one way street. In fact, the biggest problem we are having at the currency level which is a biggest drag on our ability to be competitive is actually from the quantitative easing and the hot money which is running around the world and which is fueling overvalued exchange rates in a number of emerging countries including our own. So I think that that's the other side. We live in a world where there's currency instability. I think that's the reality. Richard Darden, I'd like to change tack a little bit and talk about the social benefits of China-Africa relations. Just recently China unveiled through its FOCAC a $10 billion package in a development fund. They're going to be focusing on SME support in Africa and other such initiatives. In terms of responsibility, seems like China is starting to come into its own. Yes, because of that negative impact on Africa's small businesses, I can see China and it has the money to do that, say okay, we'll try and help you with that and transfer perhaps some of the manufacturing to Africa. But I think this is just a small, almost token compared to the sheer weight of Chinese manufacturers arriving in Africa. But I have noticed that in particularly in Nigeria, which has been up until now since the 1960s, purely an oil economy, purely an oil economy, now you just see little manufacturers starting in Nigeria. So maybe in some African countries people are beginning to actually make things and sell them there rather than wait for the next boatload to come from China. Even in development, it's a sort of a business relationship Martin, support SMEs, something more constructive as opposed to humanitarian aid and those kinds of things. Are there other tangible examples of the Chinese goodwill? Well, I think we were talking yesterday and Ambassador Liu mentioned it earlier about Chinese government attempts to, and Minister Davis mentioned it, to assist the beneficiation industrialization as part of the world. We spoke yesterday about the so-called six special economic zones, which the PRC government has established funded by large by China Development Bank in various African countries, including Deputy Prime Minister Ethiopia. Now these are very early stages, but I don't know any other country that's actively thinking about investing in Africa in manufacturing other than China. So of course it's typical, it always will be from China again for next decade or so, a state initiated push, but the state no longer really deploys the capital it more enables. And I think that's the shift, maybe a year, year and a half ago, the first 10 years, if I can say, of China, Africa re-energized engagement with the contents has been around resources. It's starting to diversify, but these official, the aid issues, the grants, that's not where the action is, the action is coming from the policy banks. Okay, Governor, you want to add to that? Yeah, I'd like to submit that, China is not going to be the panacea of Africa's economic ills, but I also would like to submit that the reason I said yes, China is a differentiator for Africa has to do with the fact that one of the reasons, and there are very many in there, they have nothing to do with China and the trade relationship between China and Africa. One of the reasons why Africa was able to fare relatively well during the financial crisis, economic recession, has to do with the fact that China was largely unaffected. Why do I say that? It's the point that has already been made, that there are now, one is beginning to see results of diversification because people are now realizing that they can engage in small business of some of the establishments that have made China small, medium enterprises as thriving as they are. So they've been replicated in Africa and therefore when the going was tough, economies were no longer relying on the other dominant export commodities, in the case of Botswana diamonds, they had to rely on other areas which were not in existence 10 years ago, but are now in existence because there's a somewhat of a working relationship between China and Africa. And we have to recognize that China is evolving from something like a strict communist approach of the past. So we just have to let them appreciate that we have been doing things differently, we have learned from our mistakes and now we are the wiser. Okay. Thank you very much. I'd like to open the session for questions from the floor. Can I just give a show of hands where some of those questions would come from? Gentlemen in the front. Microphone's coming, Arthur. Thank you very much. Thank you very much. Mutambara from Zimbabwe. One thing we need to do is to understand the nature of the African opportunity. According to the recent McKinsey report, the major opportunity is $2.4 trillion and half of it is actually coming from consumer-facing industries. Only half a trillion dollars are coming from resources. So we must excite China into the consumer-facing industries. Secondly, Africans must welcome Chinese investment. The more the merrier, the more diversified the source of investment, the better so that we can extract the better value. What is important is to make sure we negotiate better deals. Some of these fears are actually not fears from Africans. They are fears coming from the competitors to China, the Americans and the Europeans. And Africans have no business sharing those concerns. Last point, as we negotiate better deals for ourselves, let us also be comfortable with the notion of protectionism with a plan, protectionism with a timeline. There's nothing wrong with that notion. Thank you very much. Other questions? A gentleman at the back? Yeah, hi, I'm Jeff Lippmann from the World Tourism Organization. And I just want to pick up on the last speaker when he's talking about consumer-facing industries because one of the biggest growth which is going to come from China in the next 10 years is as it moves its people out and its middle-class people, particularly, as tourists. And one of the, and business travelers too, it's all the same game. And one of the biggest opportunities that Africa has, starting right here, is in the tourism sector where the kind of product that Africa has is exactly what the next generation of tourists will be looking for. So it's a question of thinking out of the box and thinking beyond the basic resource relationship and looking to the new relationship and finding the tools, the infrastructure, the easy visas, the different kind of training, all of those things, but South Africa is particularly good at that. Okay, other questions? A question in the front here, two questions in the front here. Hi, I wanted to ask, whilst we've been discussing China and Africa, where do the other brick economies come into it? For example, India. In particular, I think this gentleman over here spoke about, I think it was an unfair characterization of India's software services and China's manufacturing services. I think the other brick economies have a lot to offer Africa and I wanted to know, especially from Minister Davis, what's happening in that regard? Go ahead. Can I pick up just on the previous question about tourism? I spoke to a Chinese ambassador to Africa, I won't name the country. I said, what is your biggest problem? And he said, illicit illegal Chinese migration to this country. And these people are coming from China, I have no idea who they are, they don't register, they get into problems and I have to deal with them. And I'll mischievously say that, no, China is always nice to say, we're not an imperial power, it's true. They've never colonized anybody. But they might become, they've never been trying to rule other countries. But they might be a colonial power just by the sheer numbers of Chinese moving now to Africa. I have an academic friend who's studying a hundred small Chinese entrepreneurs in Africa and doing quite well. Starting from tiny little shops or buying copper on the copper belt, in raw hand-dug copper. And we were talking about it and saying, well, gosh, isn't that wonderful? You know, bringing all that entrepreneurial skills to Africa. And then when I went away, I suddenly thought, well, there were a hundred opportunities that had been staring local Africans in the face and they hadn't spotted it. It took that Chinese entrepreneurial spirit to actually get it started. And if that works, then you could see, you could almost imagine in Africa where, you know, all the business is being done by Chinese immigrants. It's a slightly worrying thought. Let me just say on the other bricks in China, I think the fact of the matter is, although I've been arguing that we now need to move into a new phase and we need to strengthen our own hand in terms of shaping that new phase, I think the fact of the matter is, is that China's making headway because they're actually offering much better deals, much more than the other partners who are around and the traditional ones. I think that's it, that we get infrastructure. It happens. It comes when you deal with China, when you talk to somebody else, you go through a whole series of hoops and mirrors before anything happens. That's the reality. They are much more effective at that. I think the presence of the other bricks is also growing, India and Brazil in particular. There's actually going to be an Africa-India summit, which is taking place in the next couple of weeks in Ethiopia. And I think that that also reflects the fact that those two countries have a great presence and Russia does too. And again, I think the more possibilities we have, the better we can determine our own courses because all of them have got some particular characteristics and some particular advantages they bring to us. But I think I'd want to agree with Deputy Prime Minister Mutambara that the building of the domestic market and consumer industries is fundamental if we're going to move further forward. We cannot live on just a mineral boom and a growing market which is serviced by imports. We cannot do that. We have to occupy that productive space as African countries. And I think that that means that we have to take the steps to ensure that we do promote the industrial developments. The ball is in our court. And I think we then use that as the basis on which we negotiate better terms with everybody outside. And I think, in fact, the record of us being able to work with China is more on the positive end of the spectrum. Yes, sir. On my corner? Yes. My name is Geza Hanye. I work for Plan International East and Southern Africa. Given what Africa can offer at the moment, the relationship, I believe, cannot be anything otherwise. But the most important thing is countries engage in bilateral relations, which they believe is beneficial to their countries. But where are the African institutions in all this debate? It's a couple of countries who are engaged, who can offer some resources. But the African industry, because we're talking about Africa and China, Africa is a big notion. Where are the African institutions? I believe, you know. I'll pose the question for you. Thank you very much. And I'll ask the Deputy Prime Minister, the governor, and Martin, for you to add your voice on this. Where are the African institutions in all of this regional integration? We always talk about it. What are we doing about it, the AU, those kinds of institutions? Well, where I sit, these institutions are there. My central bank is there. And I took note of what the Honorable Minister made reference to earlier about the difficulties of, in this case, the United States of America, engaging in all series of quantitative easing, which is obviously leading to money leaving the shores of the United States of America and other countries in East League coming to emerging markets like South Africa. And the exchange rate invariably appreciating to extent where it stands in the way of South Africa and other breaks to engage in a similar kind of export-led growth that India, the question you asked earlier, is able to join China in exercising. So institutions are there. And the reason why I'm saying that the central banks are there is because we then have to grapple in combination with the efforts from our respective governments with how exchange rates have to be competitive to the extent where we are able to import raw materials with relative ease and export the finished goods without worrying about other countries' practices so far as exchange rates are concerned. The most important thing is to have a real effective exchange rate that facilitates export and imports. Ambassador? Yes, I think so far as I know that we have that ready channel for consultations and negotiations between China and the African sub-regional organizations under the framework of FALCAC forum on China-African Relationship. Every three years, the Ministers of Foreign Affairs, Ministers of Trade and Industry are meeting. Every three years, the Ministers of Foreign Affairs are meeting there in New York during the General Assembly of the United Nations. And there are other consultations between China and the African Union and other regional organizations on various matters related to bilateral cooperation. And to my knowledge also, the future Chinese foreign policies in priority would be on the following four areas. One is the infrastructure, another is agriculture and rural development. And third is to share our experiences with African countries in the areas which have been approved successfully in Chinese reform and opening up to the outside world. And another area is to try to promote industrialization by opening more industrial parks. OK. As the ambassador said, I think we have an African institution, AU, the African Union. And within the African Union, we have NEPAD, which is new partnership for development in Africa when we have partnership with other countries. That is the basis for it. But every continent and countries has got a forum with Africa, the Chinese African Forum, the Indian African Forum. We have different forums which we meet together and discuss on issues of pertinent programs. So there is an institution that takes care of it. But the NEPAD is the basis for all these partnership programs. I have a final question, and I'll just take that liberty. Martin, China just recently unveiled a 12-point program on its latest reforms, more inward-looking, promotes consumerism, trying to create more favorable bank terms to support local businesses within China, to get people borrowing, building homes, that kind of thing. What does an inward-looking China mean for Africa? Potentially concerning, potentially. China's growth the last 20 years has been driven primarily by fixed asset investment spend, not exports. China has effectively been on a stimulus package spend for the last two decades plus. As China's growth drivers start to diffuse away from fixed asset investment more towards, should we say, a more normal economy of consumer-driven growth? We will start to see not significant, but gradual, drop-offs in fixed asset investment spend. The China-Africa trade relationship, the African exports to China have been driven by this fixed asset investment spend and demand for commodities. If that starts to cool off, which it will, China's growth this year will drop off a couple of percentage points. We shouldn't overreact to it. It's just a normal phenomenon. 8% is not a hard landing. Policymakers in Beijing are OK with 7.5%, 8%. But I think we should start to, as I said earlier, is not become too drunk on growth in Africa because the enabler that is decisions made in Beijing will not last forever. OK, ladies and gentlemen, I'd like to thank you for your time. I'd like to thank the Honorable Minister Rob Davies, Minister of Trade and Industry in South Africa, Mr. Richard Dowden, who's a director of the Royal African Society in the UK, the Honorable Minister Haile Mariam Desalene, who's the Deputy Prime Minister of Ethiopia and also the Minister of Foreign Affairs, the Governor Lina Mohorlo, who's the Governor of the Bank of Botswana, and also co-chair here at the World Economic Forum, Ambassador Lou Guijin, who's a special representative for African Affairs and the Ministry of Foreign Affairs, China, and Dr. Martin Davies. Thank you for your time. He's the CEO of Frontier Advisory Services. We've come to the end of the session. I hope we gave you some food for thought, and especially this issue of China's consumer base that is now being supported by the state in a 12-point program. That's the new dimension. That's the way forward. That's something to consider. Thank you, ladies and gentlemen, for your time. I do not have to intro...