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Ten lessons from China that can transform Africa [New African](New African Via Acquire Media NewsEdge) China's transformation from a poor developing nation 65 years ago into an economic as adapted from his new book, "Ten lessons from China that can transform Africa". China is still a developing country and is by no means perfect. However, what it has managed to achieve in about 30 years is very impressive and can provide lessons for African nations. China's transformation is inspiring and teaches that a nation that truly believes in itself and has the right mindset can overcome any challenge and achieve greatness. As a proud African who lived, studied and worked in China for 5 years, I saw many lessons that African nations can learn from China. Let me be clear. I am not suggesting that African nations should copy China but rather, they should learn from China's experiences and adapt some of them to their realities. So here are the 10 lessons that I think Africa can learn: LESSON 1: A nation that was once colonised can rise to be- come a superpower. China has a history of being colonised, as the USA once was. Among the dynasties that ruled in China, two were foreign - the Yuan Dynasty from 1271 to 1368, which was established by the Mongols; and the Qing Dynas- ty, which was the last dynasty, from 1624 to 1911, established by the Manchus. Besides this, in 1842, the British colonised Hong Kong; and from 1931 to 1945 Japan also occupied various parts of China. Colonisation can make a nation lose its pride, dignity, identity and self-belief, but China has managed to regain all these and even overtake its former colonisers to become the world's second largest economy today. Colonisation and slavery robbed Africa and took away its pride, dignity, identity and self-belief. China has taught us that a nation can go through such a dehumanising experience and still regain what was lost and rise again. In Chinese universities, Chinese history classes are compulsory for all students. The same happens in American uni- versities. The same has to happen in African universities. From Africa knowing its history, it can connect with its roots and regain a sense of pride. African nations can also learn from how China has used language to foster national pride. The Chinese have made Mandarin the standard language in China. Everything has been translated into Mandarin and Chinese leaders, regardless of where they are in the world, only use Mandarin for speeches and statements. Despite being colonised from time to time, the Chinese never lost their language and this is a source of pride for them. As African nations seek regional integration, a Bantu language such as Swahili (since it is already spoken by about 130 million Africans) can be selected as the lingua franca for the continent and taught in African schools in the same way that the colonial languages, English, French and Portuguese, are taught. Only when Africa has changed from the colonial mindset and regained her pride, dignity, identity and self-belief can it attain greatness. LESSON 2: A nation must create its own economic and political system guided by its national interests. After the founding of the Peo- ple's Republic of China in 1949, the country became a one- party state and initially adopted communism but later changed to what they call "socialism with Chinese characteristics". China's economy has been defined as a "social market economy", and does not fit into any one system. Rather, it takes various parts of other systems and combines them to create a system that best serves its nation- al interests. The Chinese realised that they required stability to develop and therefore adopted a political system that is a one-party system with intra-party democracy. Without the political stability that came from having a con- sistent government, the Chinese would not have been able to develop the way they have, and as quickly as they have. The Politburo of the Com- munist Party of China (CPC), which is currently made up of seven leaders, runs China unin- terrupted for 10 years and after this, there will be a leadership change for the next 10 years. Economically, the Chinese have adopted some capitalist policies in parts of the country even though they are the biggest opponents of capitalism. Africa has tried to be commu- nist, socialist, and capitalist over time and has failed. Africans now need to be pragmatists. We must now do whatever is neces- sary to serve, further and protect our national interests. A political and economic system with ubuntu/hunhu, that ensures that African interests, such as food security, good quality healthcare, education for all, and access to opportunity for all, are met, is what Africa must create at this stage. LESSON 3: A nation must always have clear programmes that are bold and have vision. Throughout China's history, there have been bold pro- grammes with vision such as the "Great Leap Forward" (1954- 1964), "Cultural Revolution" (1966-76), "Open Door Policy" (1978) and the "Go Abroad Policy" (2000). These programmes had clear objectives even though the intended results in some cases were not realised. The "Open Door Policy" ushered in eco- nomic reforms that led to rural industrialisation and enterprise restructuring. The policy opened up China's economy to foreign direct investment (FDI) and was a huge success. According to China's official statistics, the poverty rate fell from 53% in 1981 to 2.5% in 2005. It is estimated that about 300 million people were taken out of poverty. Economic policies and reforms should begin with a vision of what a nation is trying to achieve. When Chairman Mao was the leader of China, he spear- headed policies that were ambi- tious and bold. Two years after the founding of the People's Re- public of China in 1949, Chair- man Mao implemented the "Big Push" policy which included a land reform programme, build- ing factories (industrialisation through the state) and reducing consumption. In 1958, he undertook the "Great Leap Forward" pro- gramme, which attempted to make China what it is today back then. The goal was to make China an economic superpow- er. Unfortunately agricultural production fell as the focus was on steel production. The policy failed, but the lessons from this failure were invaluable for the next era. In the end, it took China almost 50 years to fully achieve Mao's vision. Then came the era of Deng Xiaoping. He is largely credited with the economic transforma- tion of China, after taking over from Chairman Mao in 1978. Deng was committed to making whatever reforms were necessary to move China forward, even if some of the reforms did not fit into the communist or socialist model. His slogan was, "who cares if a cat is black or white, as long as it catches mice". He recognised that the Communist Party of China would become irrele- vant if there was no economic growth. Deng thus adopted an "Opening Up" policy to open the country to small amounts of foreign direct investment (FDI) in special economic zones, where he reduced "red tape" for foreign companies and built the infrastructure needed to attract foreign businesses. He reformed the countryside by allowing surplus grain and other agricultural produce to be sold to the government at special prices or in free markets that did not exist before. Under Mao, running private enterprises and retaining profits was not permitted as it was seen as capitalist. Deng, however, al- lowed peasant farmers to retain whatever profits they made. This led to an increase in agricultural production. Deng then turned his attention to reforming China's state-owned enterprises (SOEs), which were no different from the typical SOEs in Africa - big, inefficient, unprofitable and overstaffed, with outdated tech- nology and lacking innovation. Under Deng, the SOEs were reformed by restructuring, sell- ing, merging, or shutting them down. This led to the SOEs becoming major drivers of the economy and the most profitable enterprises. Deng called this system "socialism with Chinese characteristics". From 1997 to the present, China has continued to imple- ment Deng's "Opening Up" policy, and in the process mod- ernised its banking system and continued to focus on keeping SOEs profitable. In 1993, China's then leader, Jiang Zemin, coined the term "Social Market Economy" to move the country's centrally planned economy to a gov- ernment-regulated (capitalist) market economy. In 2001, after protracted negotiations, China entered the World Trade Organisation (WTO). This boosted its econo- my through increased exports. China continues to invest heavily in infrastructural de- velopment. It is estimated that during the 1990s and 2000s, China invested almost 9% of its GDP in infrastructure while other emerging countries invest- ed just 2% to 5%. China's good infrastructure, relatively cheap and efficient labour, and size of market have made it one of the largest destinations for FDI. Then came Hu Jintao, whose era focused on developing a consumer-driven economy to sustain growth and address imbalances. Public spending on infrastructure, lowering of taxes, and easing credit restric- tions on mortgages and loans to SMEs were some of the policies implemented. Today, China's current leader, Xi Jinping, talks about "the Chinese Dream" that focuses on improving the quality of life of the average Chinese. In summary, China always has a clear programme that is bold and intentional. The programmes are created by the Chinese themselves for them- selves, and not by the IMF or World Bank. African nations need clear programmes that are bold and have vision. Africa knows its plight better than anyone else and has the human resources to implement the programmes effectively. Unfortunately, the economic policies of most African nations are crafted by foreigners who use aid packages and loans from international institutions to implement the policies. African nations must ask themselves what they want to achieve - the vision - and craft clear programmes to realise that vision. LESSON 4: A nation must train its youth skills that serve national interests. In China, each year, university admissions for various disci- plines are allocated in propor- tion to what skills the country requires most at that point in time. If China needs more en- gineers, then there will be more university admissions for engi- neering than other disciplines. At the end of high school, all Chinese students write a standard national exam. This determines whether a student can enter university and what he or she can study. Students who score the necessary grades have a choice to study what they desire as they have first preference in universities. The other students who have done well enough to enter uni- versity but have not excelled may not be able to study their first preference of degree programme and may be given other pro- grammes to select from. I had several classmates who told me that the degree pro- gramme they were studying was assigned to them. Students who do not make it into university usually end up in a vocation- al skills training college that educates them in line with the needs of the country, to ensure employment on completion. Africa has a young popula- tion; some estimates show that 60% of Africa's total population is between the ages of 15 and 25. Africa's population continues to get younger and the trend does not seem to be changing anytime soon. In fact, some es- timates say that by 2015, 75% of Africa's population will consist of young people. Sadly, about 133 million young people (more than 50 per cent of the youth population) in Africa are illiterate, and many of them have little or no skills. Those who have some education often exhibit skills irrelevant to the current demand in the labour market. Thus, the youth unemployment rate in Africa is estimated to be over 20%. Therefore, African nations must be deliberate in training their youth so that they can contribute meaningfully to national development. This may mean that African nations have to change their schools' curricula to be biased towards the skills the nations require. Vocational skills training should also be in line with the needs of the nation to ensure employment after completion of school. LESSON 5: A nation must be proud of its cultural heritage so it can have a strong national identity. China has turned traditional holidays that were celebrated by its ancestors centuries ago, such as the Spring Festival and the Dragon Boat Festival, into pub- lic holidays and has maintained its language and most of its customs, therefore establishing a strong national identity. Africa can do the same as we also have many fascinating myths, traditions and customs that make us unique. These can be used to instill pride in our cultural heritage, thereby promoting a strong national identity. LESSON 6: A nation's State- Owned Enterprises (SOEs) can be key drivers of the economy. The key drivers of China's economy are state-owned enter- prises (SOEs). Enterprises are identified as SOEs if the state owns, directly or indirectly, over 50.01% of shares in them. The 2011 Global Fortune 500 list, which lists the largest companies in the world, has three Chinese SOEs in the top 10, namely Sinopec Group, China National Petroleum, and State Grid. In the same year, Global Fortune's 500 most profitable companies in the world list had two Chinese state-owned banks in the top 10, namely Industrial Commercial Bank of China (ICBC), and China Construc- tion Bank. Chinese SOEs are estimated to account for about half of the country's industrial output, therefore contribut- ing significantly to China's $8 trillion GDP, and more than $3 trillion cash reserves. African nations should therefore rethink the notion that says governments should not be directly involved in economic activity but rather stick to just regulating the environment for the private sector to drive the economy. African nations cannot continue to rely on tax revenue, and in some cases insignificant mining royalties, to generate the needed funds to develop their countries. China's example shows that if African SOEs are commercialised (they remain state-owned but run like private corporations), they can generate profits for national development. SOEs should therefore play an active role in the exploitation of Africa's vast natural resources to ensure that the profits derived from such activities benefit the citizens. State-owned enterprises do not have to be involved in every sector of the economy but in strategic sectors. It is illogical and criminal for a nation to give control of its natural resources to others and to allow them to ben- efit more from those resources than its own citizens. Some may argue that the state is inefficient and has failed to manage businesses. This is a valid point as there are plenty of failed or failing SOEs. The question, however, is why they have failed. In some cases they lack skills and technology. In other cases, the issue is having incompetent people in key posi- tions in SOEs. This can be remedied by SOEs offering competitive salaries and creating the right environment to attract the best talent. Many SOEs have failed because of a culture of incom- petence and complacency. If the right talent with the right mind- set can be attracted, as China and other countries have done with their SOEs, then efficiency and profitability can become the new culture. African nations must give greater value to SOEs because of the huge positive impact they can have on the economy and the citizens, as China has demonstrated. If managed well and focused on strategic sectors, SOEs can become key drivers of African economies. LESSON 7: A nation must be quick and decisive in policy implementation. In 2008, while the rest of the world was busy debating how to deal with the world finan- cial crisis, China was already implementing its economic stimulus plan of increasing pub- lic investment in infrastructure, lowering taxes, and easing credit restrictions for mortgages and SMEs, and therefore the effects of the world crisis on China's economy were not as severe as in other countries. During the crisis, China's economy still grew by more than 9%, while the global GDP growth rate was 3% in 2008 and -0.7% in 2009. When I was studying in Shanghai during the financial crisis, I witnessed first-hand the implementation of China's policy to invest in infrastructure. Almost every major road was be- ing repaired, new buildings were being constructed, and existing ones were being renovated or re- painted. Almost everywhere you went, there was some construc- tion activity going on. The quick and decisive imple- mentation of policies by China is a great contributor to the country's success. At times they may take time to discuss issues but once a decision is made, it is implemented decisively. Simply put, when the Chinese have de- cided what to do, they go ahead and do it. This is a characteristic that African nations can learn from. African nations should focus on getting the most qualified and competent people to work in government. In China, the government recruits the top stu- dents from universities for public service, and it was the desire of most of my Chinese classmates to work for the government. Apart from offering favour- able salaries and working con- ditions, patriotism and pride in serving one's nation are some of the reasons why the most qual- ified and competent Chinese work in government. African nations can do the same. LESSON 8: A nation must be proud of and promote its own brands. In China, the Chinese search engine Baidu is bigger than Google. Instead of YouTube, there is Youku. Instead of eBay, there is Taobao. Instead of Facebook, there is RenRen. In- stead of Twitter, there is Weibo. China has blocked Youtube, Facebook, and Twitter and instead has promoted its own Chinese alternatives. The Chinese have pride in their good local brands and always make a conscious deci- sion to support them whenever possible. The Chinese are very economically conscious. They understand the power of their currency, and they are extremely aware of the impact of their spending. When China was hosting the Olympics in 2008 and the Olympic torch was making its way to Beijing from Greece, there were anti-China pro- tests when the torch arrived in France. The Chinese responded by boycotting Carrefour, which is a large French supermarket chain in China, and other French products. When a dispute arose be- tween Japan and China over the Diaoyu (or Senkaku) Islands, the Chinese boycotted Japanese products. Chinese factories began to favour South Korean component suppliers, and the US has displaced China as Japan's largest export market. It is this economic consciousness that leads the Chinese to support their local brands to help their economy. After decades of growth that came mainly from foreign direct investment (FDI) and exports, China is now looking to stimulate domestic consumption to ensure sustainable economic growth. Haier, a Chinese home appliances manufacturer, is an example of a company that has done extremely well in part because of the desire by the Chinese to support their local brands. The story of Haier Corporation provides lessons. Haier was founded in 1984 and has transformed itself from an insolvent refrigerator manufacturer on the brink of bankruptcy into the No. 1 global home appliance brand. In 2012, Haier's global revenue and profit reached $25.8bn and $1.42bn re- spectively. On the 2012 "World's 50 Most Innovative Companies" list, released by the Boston Consulting Group, Haier was the only Chinese company in the top 10. African nations must make their citizens more economically conscious. Each dollar spent can have a positive or negative effect on the economy and since most African economies are small, every dollar counts even more. Where there are African alternatives, Africans should support African brands because that is more likely to benefit Africans. If Africans produce in Africa, consume in Africa, and trade within Africa, the continent will be in a better po- sition to determine its economic destiny. LESSON 9: A nation must have the courage to make decisions that are in the best interest of its people regardless of criticism. China has been criticised in some circles for various positions it has taken, but this has not stopped it from doing what it feels is in the best interest of its people. China has also been criti- cised for not being a multiparty democracy and instead choosing to remain as a one-party state. The Chinese know that it will not be in the best interests of their people to have a multi- party democracy because of the instability it can create. With a population of 1.3 billion and 56 minority groups, it would have been difficult to keep China stable. When the Chinese initiated the "Go Abroad" policy in 1999, the goal was to spread its foot- print around the world. Chinese companies were encouraged to invest abroad and either acquire or partner with foreign companies. They were given cheap loans to help them set up abroad. This has seen Chinese companies spread out all over the world. In effect, the Chinese are in Africa to further their interests and if African nations allow themselves to be exploited by the Chinese, then the fault is theirs. The Chinese are doing what is in the best interest of their people, and so it is up to African nations to do what is in the best interest of their people. Africa should also use China to further its interests. LESSON 10: A nation that exploits its competitive advantage can become globally competitive. China has taken technology from Europe, and cheap raw materials from Africa, and combined them with its relatively cheap and efficient labour to manufacture and export finished goods to the world. From high quality goods typically found in the US and Europe to the cheap goods typically found in Africa, China makes something for everyone, because it has capitalised on its strengths to be globally competitive. Africa has fertile soils, abundant water resources, and a favourable climate for agricul- ture. Africa also has abundant mineral wealth, and a young population. The African Union estimates that 65% of Africa's slightly over 1 billion population is under the age of 35. These are strengths for Africa. The competitive advantage for most African nations lies in agriculture and mining. Cur- rently most African nations are exporting unprocessed agricul- tural produce and minerals. The processing and beneficiation is being done in other countries, therefore providing jobs and higher profits in those countries, and in some cases the finished products are being sold back to the same African nations. Africa can make agriculture a key driver of its economy by being involved in the entire value chain. This would mean that instead of exporting just cotton, you export fabric. In- stead of just timber, you export furniture and fittings. Instead of just cocoa, you export coffee or chocolate. This will create jobs for the youth of Africa, and more importantly poverty will be reduced. Some will argue that African nations do not have the capital, skills and technology. Neither did China initially, but by focusing their scarce resources on key areas, and transferring the needed skills and technology from those who had them, they did it. There is no reason why Africa cannot do the same. What next for Africa There is nothing that China has done that African nations cannot do or even surpass. Africans only need to start by believing in themselves and having the right mindset, and they too can achieve great things. African nations can draw inspiration from China but must not aim to be China. We are Africans, but we can learn lessons from others. NA Only when Africa has changed from the colonial mindset and regained her pride, dignity, identity and self- belief can it achieve greatness. China's education system focuses on developing useful workers from a young age China's programmes are created by the Chinese themselves, and not by the IMF or World Bank. The Chinese at work and play: New Year's celebrations (left); and construction workers building infrastructure (right) SA President Jacob Zuma with Chinese Premier, Xi Jinping (c) 2014 IC Publications, Inc. |