Are Cutbacks in Store for Chinese-financed Special Economic Zones?

 FDI Intelligence published on 27 October 2022 an article titled "China's BRI Pullback Threatens Free Zone Development" by Alex Irwin-Hunt. 

The reduction in Belt and Road Initiative-related financing may mean that special economic zones which are built and financed by China are at risk of not being built or completed to the extent planned.  

Chinese Manufacturing Investments in Nigeria

The China Africa Research Initiative at Johns Hopkins School of Advanced International Studies published in April 2020 a study titled "'Africa's China': Chinese Manufacturing Investments in Nigeria in the Post-Oil Boom Era and Channels for Technology Transfer" by Yunnan Chen.

The study outlines major Chinese investments in Nigeria's manufacturing sector, specifically looking at their potential to foster industrialization and structural transformation. Political and exchange rate instability were consistent challenges in the wake of the recent economic recession.

Chinese Engagement and Activity in Africa

The Beijing Axis, a professional services firm based in Beijing, published in the second quarter of 2019 a major study titled "The China Compass: Economic Trends & Analysis."

Chapter 2 (pages 12-60) cover "Chinese Engagement and Activity in Africa." They contain useful charts and graphs on China's trade, investment, and loans in Africa. There is a separate section devoted to China-South Africa economic relations.

Industrial Parks and Free Zones in Ethiopia and Morocco

The Brenthurst Foundation published in January 2019 a discussion paper titled "A Tale of Two Free Zones Learning from Africa's Success" by Greg Mills.

The author concluded that to ensure the free zones are more than just sweatshops, Ethiopia and Morocco have demonstrated that the full package of policy issues must be addressed, including political stability, free trade deals, logistics to and through ports, integrated value chains, and tax and other incentives.

The Hawassa Industrial Park in Ethiopia was built by the Chinese Civil Engineering Construction Corporation at a cost of $250 million. It hosts 98 (mostly Chinese) enterprises, employing 14,500 Ethiopians and 1,100 Chinese. Morocco's development of a new port, known as Tangier Med, has three free zones in the port and two industrial parks at the nearby city of Tetouan. It is a $4 billion public investment concentrated on the port, purchase of the land, and construction of 50 kilometers of expressway.

Africa's Largest Free Trade Zone Under Construction in Djibouti (French and English)

The Oxford Business Group posted on 29 August 2018 an article titled "Launch of Free Trade Zone To See Djibouti Develop As Regional Trade Hub."

Djibouti has launched Africa's largest free trade zone, a ten year and $3.5 billion project. Scheduled for completion in 2028, it is funded by Chinese state investors.

Africa and the New Silk Roads

Thierry Pairault, research director emeritus at France's Centre National de la Recherche Scientifique, posted on 31 August 2018 a study titled "Africa and the New Silk Roads."

The author correctly notes that in terms of foreign direct investment and trade Africa is a minor economic partner for China, although China is a major economic partner for Africa. China is largely following a commercial strategy in Africa: selling goods and services. In the context of China's Silk Road strategy, he takes a closer look at China's engagement in Morocco and Djibouti. Pairault concludes that Morocco will allow China better access to the European Union market and eventually the African market. Djibouti, although having some utility for extending China's security reach, is more importantly a key link in China's Digital Silk Road and its efforts to leapfrog Western financial competitors by building a digital money system.

Djibouti Tries to Attract Light Industry Leaving China Because of Higher Wages

How We Made It in Africa published on 22 March 2017 an interview with the chairman of the Djibouti Ports and Free Zone Authority titled "Djibouti Wants to Attract Light-manufacturing Industries as Wages Rise in China."

The article reports that Djibouti hopes to attract light-manufacturing departing China due to rising wages. There are several challenges working against this goal. Does Djibouti, a country of about one million, even have the labor force to to absorb a significant amount of manufacturing? Why would this manufacturing move to Djibouti and not a number of other developing countries with lower wages, especially some in Asia?