China makes strides in reform development - CNBC Africa

China makes strides in reform development

Special Report

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China's economy is growing at a steady pace. PHOTO: Getty Images

“The big question on reform that comes from everybody when I’m there, especially Western, is when are they going to become democratic? That’s not even on the agenda. It doesn’t mean that the reform is going to be a small reform if they don’t become democratic – that's not the issue,” Matthew Birtch, a lecturer of strategic management at the Gordon Institute of Business Science, told CNBC Africa.  

“There’s massive reforms that are going to be coming down the line and you’re going to be seeing businesses investing, operating and starting companies and industries like telecoms, energy, infrastructure, which was unheard of five or 10 years ago.”

The Chinese economy continues to grow at a fast pace and huge opportunities, for both local and international businesses, are now becoming visible.

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The economy is gradually shifting from an export-driven economy to a more consumption-led economy and Birtch feels that the idea that China’s economy could be slowing down is a misconception.    

“This idea of a slowdown is being way overplayed. China was never going to be able to grow at 10 to 15 per cent GDP per annum – cities like Beijing and Shanghai were effectively growing in the boom period at about 25 per cent GDP. This is not sustainable. That target for the next decade is to grow at seven per cent GDP, which is absolutely attainable,” he said.    

“Anything around fashion, internet, internet businesses particularly retail is going to become huge, movies, film, production – you’re going to see that coming online in the next 10 years because that is the reality of true power. When people start to think slightly in a Chinese way or start consuming Chinese-designed products, that’s when the shift of power really takes place.”    

From 2009 to 2012, Chinese foreign direct investment in Africa increased from 1.4 billion dollars to 2.5 billion dollars but Birtch insisted that massive investment deals are going to become few and far between.

“This Inga Falls project, around the hydroelectric dam – that could give power to 500 million Africans.  Deals like that are really starting to slow down. Those are your one-in-a-year, one every two, three years,” he explained.

“Where people can start to take advantage of the situation between China and Africa is around your consumer-driven products. We’ve seen the African consumer come online recently, we’ve seen more disposable cash and income and that’s exactly where China’s starting to move to now.”

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