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China-Africa Relations; the case of MoroccoPRESENTED BY: KAOTAR ANKOURI

HOHAI UNIVERSITY BUSINESS SCHOOL

IntroductionAfrica and China have many centuries of collaboration.

In recent years, a dramatic increase in the level and the intensity of the relationship.

In early 90s, the relationship was dominated by official development assistance and government action.

Today, Chinese companies and joint ventures have replaced public bodies.

China now represents for Africa a donor, a market, a financier, an investor, and a contractor.

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ContentsHistory of the relationship between China and Africa

1. Early history 2. 15th to 20th century3. After the decolonization of Africa

Current state of the relationship between China and Africa1. Trade is growing, but exchanges are unbalanced2. Aspects other than Trade

The case of Morocco1. General information and Economic indicators 2. China-Morocco: win-win partnership3. From Cooperation to strategic partnership4. Great projects

Conclusion

History of the relationship between China and Africa

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The Chinese before the Europeans

Da Ming Hun Yi Tu -大明混一圖 Created in China circa 1390

Chinese coin minted 1403-1424 found in Kenya

A giraffe brought from Somalia to China circa 1415

Maritime trade as early as 202 BCand Zheng He’s exploration

Source: www.nitibhan.comSource: www.britannica.com

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A decline from the 15th to 20th centuryThe role of China supplanted by Arab, indo-Pakistani and Europeanimmigrants

The expansion of the Sultanate of Oman, who made Zanzibar its capital

Documented cases of Chinese migrants settling in the Islands and on the coasts of the Western Indian ocean, as workers from China to work in mines and plantations

Descendants of these Chinese migrants still live in Kenya, confirmed by a DNA test

Tribes north of Cape Town claim descent from Chinese sailors, their physical appearance is similar to Chinese with paler skin and a Mandarin sounding tonal language.

Revival after the decolonization of Africa1955: Bandung Conference, also known as Asian-Africa Conference

1956: 8th Congress of the Central Committee of the Communist Party formalized the Chinese policy towards Africa

A series of Afro-Asian conferences, all held in Africa: Cairo (1957), Accra (1958), Conakry (1960), Mogadishu (1963) and Winneba (1965)

1960: Sékou Touré (Guinea) the first African leader to officially visit the PRC

1964: visit of Zhou En-Lai to ten African countries: Algeria, Morocco, Sudan, Guinea, Ethiopia, Mali, Somalia, Ghana, Egypt, and Tunisia

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New cooperation in trade, military, and educationChina positioned itself as an anti-imperialist counterweight to the West.

China penetrated the territories left untouched by the United States and the Soviet Union

Participated in ambitious projects such as the construction of the railroad "Tanzam" linking Tanzania with Zambia

Entered into military cooperation agreements with countries of similar ideology in East Africa, including Ethiopia, Uganda, Tanzania, and Zambia

Opened its universities to African students

Current state of the relationship between China and Africa(1) TRADE IS GROWING, BUT EXCHANGES ARE UNBALANCED

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Bilateral trade is growing

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2008 2009 2010 2011 2012 2013 2014 2015

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坐标轴标题

African Exports and Imports to/from China and the world in million USD

Exports to China Imports from China Exports to world Imports from world

Sources: IMF, Direction of Trade Statistics; author's calculations

China is Africa's third-largest trading partner after the U.S. and the Euro Area

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2008 2009 2010 2011 2012 2013 2014 2015

Share of African Exports by destination, % of total exports

United States China,P.R.: Mainland Euro Area Other

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2008 2009 2010 2011 2012 2013 2014 2015

Share of African Imports by provenance, % of total imports

United States China,P.R.: Mainland Euro Area Other

Sources: IMF, Direction of Trade Statistics; author's calculations

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China's increasing share of African Exports

0%

5%

10%

15%

20%

25%

30%

35%

2008 2009 2010 2011 2012 2013 2014 2015

Major trading partners' share of African Exports, % of total exports

US share EU share China share

Sources: IMF, Direction of Trade Statistics; author's calculations

Unbalanced bilateral exchanges

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Africa's share in Chinese Exports, % of total exports

China's imports other than from Africa China's imports from Africa

Africa's Share of Chinese imports

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Africa's share in Chinese imports, % of total exports

China's imports other than from Africa China's imports from Africa

Africa's Share of Chinese imports

Sources: IMF, Direction of Trade Statistics; author's calculations

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China has a large share in Africa's global trade deficits

-17,706

-7,130-11,426

-26,956

-59,820-63,619

-12,639

-54,404

-89,117

-160,806

-180,000

-160,000

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2008 2009 2010 2011 2012 2013 2014 2015

Trade balance Africa-China and Africa-World, in million USD

Balance-China Balance-world

Sources: IMF, Direction of Trade Statistics; author's calculations

21% 30% 37%56%28%

Current state of the relationship between China and Africa(2) ASPECTS OTHER THAN TRADE

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AidBeginning of 1990s – Aid is 20% of exchanges

2004/2005 – Aid is 3-4% of exchanges

⚠ Almost impossible to quantify exactly how much aid flows from China to Africa

Estimation by Strange et al. : 2000-2011 USD 75 billion (one fifth of flows from OECD, almost equal to USA)

Sovereign debt Debt relief:

2000-02: cancelled up to 10.5 billion yuan in debt backlogs.

2006: cancelled 10 billion yuan of debt for 33 African countries that are heavily indebted, underdeveloped, and have diplomatic relations with China.

Due to lack of data, difficult to understand the terms of debt relief and compare them to terms offered by the IMF and the World Bank joint debt relief program for Heavily Indebted Poor Countries

Many question the motivation behind the debt relief, and China’s willingness to accord debt to countries that cannot repay

Usually, harsh terms are enforced once the borrowers are unable to repay in time, including: Giving China exclusive rights to a nation’s resources

Access to markets and investment opportunities

Especially in the infrastructure sector: roads, power plants, pipelines, telecommunications

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Private debt and Foreign Direct InvestmentTrade credits are an important part of the financial flows from China to Africa

Several state-owned banks have support China’s presence in Africa:China Development Bank (CDB), loans to Chinese firms + China-Africa

Development Fund to support Chinese FDI in Africa. Exim Bank (China Export-Import Bank): promotes Chinese exports and foreign

direct investment (FDI)

⚠ Still no detailed information available

In general, Chinese lenders favor infrastructure projects in Africa

FDI flows both ways, as African FDI to China has also significantly increased in recent years

The case of Morocco

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Location

Population: 33,503,000 (39th) Population: 1,373,490,000 (1st)

General information

MOROCCO

Capital: Rabat

Form of state: Constitutional Monarchy

Head of state: King Mohammed VI

Head of government: PM AbdelilahBenkirane

Currency: Moroccan dirham◦ (1 EUR=10.8165 MAD)

CHINA

Capital: Beijing

Form of state: Communist State

Head of state: G.S. and President Xi Jinping

Head of government: Premier Li Keqiang

Currency: Chinese yuan ◦ (1 EUR=7.3963 CNY)

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Economic indicatorsMorocco China

GDP per capita 3196 (Dec.16) 6894 USD (Dec.16)

GDP growth rate 4.2% (Jun.17) 1.7% (Sep.17)

Government Debt to GDP

64.7 % (Dec. 16) 46.2 % (Dec. 16)

Inflation rate 0.6 % (Oct. 17) 1.9 % (Oct. 17)

Interest rate 2.25 % (Oct.17) 4.35 % (Oct.17)

GDP breakdown by sector-2016

14%

29%57%

Sector, % GDP

Agriculture

Industry

Services

Constructed from The World Factbook figures - www.cia.gov

MOROCCO CHINA

8%

40%52%

Sector, % GDP

Agriculture

Industry

Services

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Trade structure of Morocco

China-Morocco: win-win partnershipMorocco is a strategic access point to French-speaking Africa

Strategic location with access to sea and ocean

4th destination of FDI in Africa

1st destination of FDI in North Africa

1st African investor in French-speaking Africa (Banking and financial institutions, telecommunications, construction…)

China is Morocco’s 4th commercial partner (after France, Spain and USA)

Attracting Chinese investments

400 billion to be invested in Africa by 2020, announced by President Li Keqiang during last visit

Penetrating the Chinese market

Largest consumer market in the world

High disposable income, Chinese tourists biggest spenders (#1 WW)

Morocco #1 tourist destination in Africa

Infrastructures of MoroccoSource: Agence Nationale de Promotion des Investissements

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From cooperation to strategic partnershipMay 2016: King of Morocco visits China

Strategic partnership agreement signed in Beijing

Larger cooperation in many areas: oil and mining,

agriculture,

environmental protection,

fisheries,

infrastructure building,

digital communication,

renewable energies,

industry, metallurgy and electronics

Great projectsJuly 2017: Agreement signed between:

China Railway Construction,

BMCE Bank of Africa (Moroccan bank)

Construction Travaux Généraux de Casablanca (leader in construction in Morocco)

Tallest sky scraper in Africa, 250 m high with ecological concept

Other plans for Grand Théâtre de Rabat, the House of Arts and Culture, the national Archives of the Kingdom of Morocco and an archaeological museum.

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Great projectsMarch 2017: Convention with Haite group to build “CitéMohammed VI Tanger Tech”

New industrial city of 2000 hectares

To host 200 Chinese companies operating in automotive construction, aeronautical, textile industries

Estimated budget: 10 USD Billion

Create 100 000 jobs (90% local)

Duration: 10 yearsKing Mohammed VI (c) and Li Biao, president of the Chinese group Haite, in front of the model of

an "industrial city", on March 20, 2017 at the Royal Palace near Tanger

ConclusionFINAL WORD: HOW CAN AFRICA BENEFIT FROM THIS GROWING RELATIONSHIP

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How can Africa benefit from this growing relationshipReducing investment and business costs: creating a better business climate in order to attract more capital

Insuring fair competition: increasing the transparency of all state-sponsored transactions to promote the good governance of Africa’s valuable resources

Preventing the accumulation of debt: balancing the need of funding vs. limited production capacity to absorb it

Preserving natural resources: careful planning and regulatory control of natural resources that are abundant but mostly non-renewable (learn from China’s mistakes)

Advancing within the value chain: evolving from the simple export of raw materials to their transformation (learn from China’s experience)

ReferencesDes relations qui remontent fort loin dans l'histoire - http://ma.china-embassy.org/fra/zt/sinoafricain/t1170813.htm (Accessed: 1st December 2017)

Les Chinois en Afrique avant les Européens ? - Afrik.com : l’actualité de l’Afrique noire et du Maghreb. Available at: http://www.afrik.com/article21058.html. (Accessed: 14th November 2017)

La Chine à l’assaut du marché africain, par Jean-Christophe Servant (Le Monde diplomatique, mai 2005). Available at: https://www.monde-diplomatique.fr/2005/05/SERVANT/12218. (Accessed: 14th November 2017)

IMF Data. Available at: http://www.imf.org/en/Data#data. (Accessed: 28November 2017)

Wang, J.-Y. What Drives China’s Growing Role in Africa? IMF Work. Pap. 7, 1 (2007).

Strange, A. et al. China’s Development Finance to Africa: A Media-Based Approach to Data Collection. Center for Global Development (2013). doi:10.2139/ssrn.2259924

China "Debt Forgiveness" Not Very Forgiving Or Transparent. Available at: http://www.valuewalk.com/2015/12/china-africa-debt/. (Accessed: 14th November 2017)

Moss, T. & Rose, S. China ExIm Bank and Africa: New Lending, New Challenges. Cent. Glob. Dev. http//www. cgdev. org (2006).

Renard, M.-F. China’s Trade and FDI in Africa. African Dev. Bank Gr. Work. Pap. Ser. 126, 1–38 (2011).

Bio-tchané, J. W. A. Afrique–Chine : des liens plus étroits - Finances & Développement, mars 2008. Source 44–47 (2008).

Ranking of economies - Doing Business - World Bank Group. Available at: http://www.doingbusiness.org/rankings. (Accessed: 19th November 2017)

World Bank. Cost of pollution in China: Economic estimates of physical damages. World Bank Rep. (2007).

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Q & A