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China's leap, Africa's doom

Summary & Comment: With a comparative advantage in the textile and clothing industries that's made possible by (especially) an extremely low-cost, labour intensity, China's international trade fortunes, in both categories, have had an ill effect on many countries worldwide -- and an especially injurious one on Africa. Consequently, many of those affected are beginning to question the fairness of continuing the prevailing pattern of trade in both of these categories. Whether this issue will result in a case of schizophrenia for unbowed votaries of unrestrained international trade remains to be seen. J.M.

Author: Teke Ngomba Date Written: 24 June 2005
Primary Category: Economic Justice Document Origin: Teke Ngomba
Secondary Category: Africa General Source URL:
Key Words: trade, fainess, textile, clothing


Printable Version

(many thanks to the author for writing this article for Africafiles.)

China's Leap, Africa's Doom

Spinning, weaving, dyeing and stitching-garment making has been in the vanguard of most of the world's industrial revolutions - from the Lancashire Mills of the 19th Century to the Hong Kong sweat shops of the 1980s.  The sector was at the heart of the economic miracles of Vietnam and Mauritius.

And now, a trade, which has revolutionized so many economies around the world, is itself undergoing a revolution. A surge in the importation of Chinese and Indian textiles and clothing is threatening national economies worldwide with Africa getting, in the words of  Selwyn Gershman, Managing Director of Gregory Knitting Mills Ltd in South Africa,  "the big, big, kick"

Genesis

For about 40 years, international trade in textiles and clothing has been covered by several special arrangements. Amongst them, the 1961 Short Term Arrangement Regarding International Trade in Cotton Textiles, the Long Term Arrangement (1963-1973) and the Multi Fabric Arrangement, MFA. The MFA was aimed at protecting the textile industries of developed nations facing competition from low cost producers in poorer countries.

Extended five times, the MFA eventually came to an end on 31 December 2004. Henceforth, the world has witnessed an expanding, borderless Chinese textile and clothing export market, which has left misery in its wake. China and India control 65% of the world export market in textiles and clothes. This trend is redrawing the economic map of the world.

Changing Times

Until 1820, China accounted for less than one-third of world GDP. Today, after more than two decades of high growth, China's share in total world GDP (in PPP measures) is estimated at about 15%. There are projections of China "overtaking the US economy" by 2040. In the US, industry experts estimate that the country could lose 600,000 jobs if action is not taken to control Chinese textile imports.

The impact of China's emergence as a textile giant is particularly devastating for smaller developing countries with less diversified economies, especially in Africa. At the beginning of 2005, the US International Trade Commission issued a report on the impact of MFA termination, identifying Lesotho, Kenya, and Mauritius as particularly vulnerable.

In 2000, China established the pro-business, China-African Cooperation Forum with 44 African nations, paving the way for a free trade and investment pact with the region. With today's upsurge of Chinese textile exports to Africa at relatively cheaper prices, the results are clear for all to see.

Guiru Ling, Economic and Commercial Counselor at the Chinese embassy in South Africa, acknowledges that Chinese textile and clothing industry, accounts for 50% of Chinese GDP. Meanwhile in Africa, textile and clothing industries are closing in spades. Evaluating the impact of the escalating textile and clothing imports from China, it is clear that the results are incontestably negative on the economies of most countries.

By January 2005, six textile factories had shut down in Lesotho, rendering 6,650 people jobless. In Malawi, 2,511 jobs were cut in the textile industry, between January and March. 30,000 jobs are at stake in Swaziland's textile industry. In relatively well-of South Africa, 86% of all clothing and 60% of towels and blankets comes from China.

Tanya Van Meelis, Trade and Industry Policy Coordinator for the Congress of South African Trade Unions, says this  "dramatic increase" in textile imports has led to "unacceptably high rise of unemployment" sending South Africa's trade balance "strongly into  the negative".

Finger of Blame:

Jeffrey Abaroobam, Production manager at the Gregory Knitting Mills Ltd, looks furiously at a printing machine which he says has been out of duty for 6 months as a result of no printing commands, and says bluntly:  "the Chinese are fucking us up good and solid. If it weren't for them, this machine would have been working".

Brian Brink, Executive Director of the South African Textile Federation, says "India is as dangerous as China". Van Meelis states that the import of second hand clothing is also "killing the South African industry". According to EUROSTAT, in 1998 for example, the European community exported some 515, 800 tons of second hand clothing to developing countries. Germany alone exported some 150,000 tons mostly to Africa.

Guiru Ling, says China's "market expansion" in the world textiles and clothing industry is "nothing to blame" because 'it is integration that brought China this right"

In May 2005, then French Foreign Minister, Michel Barnier, said the situation was "grave" and urged the EU  to "act without delay to save European textile jobs". Carlos Guiterrez, US Commerce Secretary, said earlier this month that China risks " an outbreak of protectionism" if it does not "revise" its export policies on textiles. Earlier this year, Eneko Landabum, Director General of External Relations at EU said the EU's stand, similar to that of the US,  was "consultative and very reasonable."  Mr.Ling calls such threats a "wrong move, a discriminatory doing which will never be accepted by China."

In Africa, there has been criticism of many governments' stands on the issue. Van Meelis says the South African government's response has been "entirely insufficient". However, Mr Ling says China "greatly appreciates the support from the South African government on this issue".  Iqbal Sharma, Chief Director of International Trade and economics at the South African Department of Trade and Industry said earlier this month that in line with "existing regulations", the South African government "cannot move until industries make an effort to help themselves."

Mr. Ling says China has taken "sufficient notice" of the concerns by various circles in South Africa over the textiles issue. He notes that in June 2004, China donated 4 million Rand to be used by the South African government to "support" the South African Textile and clothing industry. Gershman Selwyn describes the donation as "a positive gesture, but one that's really insulting. It's like giving us money for tea and biscuits." Jeffery Abaroobam, touches a stenter machine in his factory and explains: "this machine alone costs 10 million Rand. We are using two of them, that is 20 million Rand," He says for the Chinese to donate 4 million Rand to the whole South African textile and clothing industry is "simply ridiculous".

Ideological differences aside, pessimists, optimists and skepticists agree on one thing - China is reshaping a critical aspect of the global economy in a manner unfathomable years ago. The early consequences have been terrifying -- rising lay-offs in the textile industry world wide with a wanton impact on communities.

Anne Krueger, First Deputy Managing Director of IMF, said in January 2005 that increasingly, "our economic fortunes are now linked with those of China. Its sheer size makes it increasingly important for global economic growth"

This phase of the history of the textile and clothing industry in Africa reads like a great fable of the challenges of global trade. The lessons to be learnt by African leaders are clear on the wall. Mr. Ling says China's success is thanks to its "positive response" and "timely readjustment" in face of difficulties. Lyndon. B. Johnson,  the 36th US President, once prescribed it succinctly: "A good president must grapple with the course of events and the directions of history. What he must do is to build tomorrow in the immediacy of today."

Printable Version

Disclaimer: Opinions expressed in this article are those of the writer(s) and not do necessarily reflect the views of the AfricaFiles' editors and network members. They are included in our material as a reflection of a diversity of views and a variety of issues. Material written specifically for AfricaFiles may be edited for length, clarity or inaccuracies.

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