President of World Bank says Beijing interested in developing manufacturing base and boosting economy

This article is more than 10 years old

This article is more than 10 years old

The Chinese government has shown "strong interest" in setting up factories in Africa, helping the continent develop a manufacturing base and boost its economy, the president of the World Bank said today.

While most attention on China's investment in Africa has focused on its large-scale pursuit of natural resources, experts say a growing number of entrepreneurs are experimenting with production.

However, some questioned whether the workshop of the world was ready to outsource much of its industry.

"There is not only willingness but strong interest among some in China, and I've discussed with the minister of commerce, Chen Deming, that there may be possibilities of moving some of the lower-value manufacturing facilities to sub-Saharan Africa, toys or footwear," Robert Zoellick, the president of the World Bank, told the Financial Times.

He suggested that Chinese knowhow in production and marketing could boost Africa's declining share of international trade, but admitted infrastructure improvements were needed to attract companies.

It is thought the scheme might involve creating industrial parks – possibly part-funded by the World Bank and China – so companies could settle in quickly and operate more effectively.

The institution sees manufacturing as a missing element in the continent's development.

China is keen that its presence in Africa should be viewed as more than a resources grab.

Last month, the Chinese premier, Wen Jiabao, announced a $10bn (£6bn) low-cost loan initiative, tariff reductions and debt relief-initiatives as the latest steps in its developing partnership.

Analysts suggested the measures would help drive demand for Chinese exports as well as aiding African states.

Trade between China and Africa reached a record high of $106.84bn in 2008, an increase of 45.1% year-on-year, according to Chinese customs figures.

China's direct investment, excluding the financial sector, rose to £550m in the first half of this year, up 79%, while the country has built huge amounts of infrastructure in recent years.

The relationship has also brought friction, with some African leaders arguing that competition from cheap Chinese imports has undercut an already weak manufacturing base, even if consumers have benefited.

Campaigners in Africa as well as the west also complain that China does not press its partners on governance and human rights issues, filling the coffers of leaders whom others believe should not be in power.

Dr Jing Gu, of Sussex University's Institute of Development Studies, said intense domestic competition had already led Chinese companies to look further afield for opportunities.

"My own research on Chinese private investment has shown that it is increasingly in manufacturing," she said.

"If you consider Ghana's 340 Chinese investment projects, more than 100 are in manufacturing. In Ethiopia, about 66% of Chinese companies are.

"With China's push for industrial restructuring at home, Chinese companies have [also] been saying there's an urgent need to move up the value chain. That might leave a space for Africa.

"There are already [government] measures aimed at facilitating access to credit and simplifying procedures for Chinese firms looking to invest overseas, especially in Africa."

Professor Shujie Yao, of the China Policy Institute at Nottingham University, pointed out that many Asian economies had made similar transitions from mass-producing cheap goods to outsourcing manufacturing.

"Japan moved its manufacturing to South East Asia ... Hong Kong, Singapore, Taiwan and Korea moved theirs to China," he said.

But he added that any substantial shift of manufacturing could be "painfully slow" given Africa's infrastructure and said China still had an abundance of cheap labour.

Provincial governments might well resist a measure that would be likely to cost jobs.

Rhys Jenkins, the professor of development economics at the University of East Anglia, said there were already complaints in Africa that Chinese investors brought in their own labour force to work on projects instead of creating jobs for the local population.

The ministry of commerce in Beijing could not be reached for comment.