For quite some time I have been trying to compare my country Uganda and our close friend China. I see a lot that has been achieved through our partnerships and I see a lot more is still in the offing for us to gain from in the friendship between the two countries.

On my trip to China a few weeks ago, I really admired whatever step China has reached at and I salute the leaders of the great Communist party who have tirelessly made sure that all their development plans have been achieved in the allocated periods documented in their termly plans.

First, China is the fastest growing economy in the world for the last few decades and one of the defining features of china’s growth has been investment-led growth. China’s sustained high economic growth and increased competitiveness in manufacturing has been underpinned by a massive development of physical infrastructure.

Infrastructural development has greatly played an important role in promoting economic growth in China between 1975 and 2007; the results reveal that infrastructure stock, labour force, public and private investments have played an important role in economic growth in China.

More importantly, infrastructure development in China has a significant contribution to growth than both private and public investment. Further, there is unidirectional causality from infrastructure development to output growth justifying China’s high spending on infrastructural development since the early nineteen- nineties.

My experience from China suggests that it is necessary to design an economic policy that improves the physical infrastructure as well as human capital formation for sustainable economic growth in developing countries.

The Chinese believe that if you want to be rich, you need to build a road and a bridge. Which is true, as the infrastructure facilities; China has built over four decades of reform and opening-up have boosted its economic growth and helped it lift more than 800 million people out of poverty and made them well off with better services.

Infrastructure facilities are public goods that help improve productivity and people’s standards of living, even in poverty-stricken areas. For China, infrastructure has facilitated economic development, and vice-versa.

Based on my observations, I view China as the leading infrastructure finance provider on the continent as demonstrated by its pledge of $60 billion to Angola and Guinea to work on big projects including hydropower plants, an oil refinery in Nigeria, and a new city in Egypt and most of the funding which amounts to almost $47 billion out of the $60 is for infrastructure projects.

China also included infrastructure construction in its five-year plans, which have had different characteristics in different periods of economic development. Infrastructure was given the second-highest priority next only to the development of agriculture and township enterprises highlighting the concept of scientific development.

In my observation, I found that the introduction of market mechanisms in public goods supply has much promote development in China. To overcome the shortage of funds for infrastructure construction, one professor told me that the country follows the principle of marketization, where some fees is charged for the use of public goods, in order to share construction and operation costs, and promote rational and effective allocation of resources.

And using the same mechanism, the income collected from the use of the bridges, tunnels and ferries is used to repay the construction loans which is a very good model that all the African countries should just copy and paste here and in this case I recommend that Uganda starts using the model with the current Entebbe Express way and other upcoming projects like the flyovers.

China has also gradually introduced diversified investment and financing models such as build-operate-transfer, asset securitization and public-private partnership, after initially relying on financing support from the World Bank. These models have played a big role in some of China’s important infrastructure projects like Railway construction, Tunnel construction, Road construction and many more other projects.

Back to Africa, I think many countries have benefited from the infrastructural development goal by China, many of the countries are beneficiaries one being Kenya, the Standard Gauge Railway is the largest infrastructure project in Kenya since its independence in 1963. China Eximbank provided the finance for the first phase of the 472 kilometers of track between Nairobi and Mombasa at a cost of $3.2 billion.

In Uganda here, we have achieved more than enough in infrastructural development from the government of China and one of the projects that we have got is the Entebbe Express way, this road is no different from the express ways in China basing on the design and quality, the expressway was estimated to cost US $476 million and of this, US $350 million was a loan from the Exim Bank of China at 2 per cent annual interest which was a very good deal and right now the express way is very ready to use pending approval of payment mechanism by parliament..

In neighboring Ethiopia, an electric train line from Addis Ababa to Djibouti, which is also Chinese-financed, opened years ago. The cost for this more expensive type of railway was $3.4 billion for 756 kilometers.

I am very sure that this China-Africa relationship will make a way for many African countries to develop their infrastructures like the roads, bridges and the other ones that are of great importance to the various countries.

Michael Woira

Uganda Media Centre

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By Joergen Oerstroem Moeller

Amid continuing tensions with Beijing, the US and India have unwittingly handed China economic leadership of Asia.

In one of his first moves as US president, Donald Trump torpedoed his predecessor Barack Obama’s initiative to establish a large economic arrangement across the Pacific with strong emphasis on technology and services, the Trans-Pacific Partnership.

Obama designed the TPP not as a mere trade agreement, but a political gesture substantiating statements on Washington’s ‘pivot to Asia’. He said openly that without the TPP, China would write the rules on trade and investment.

Trump’s decision to withdraw from the TPP laid bare his thinking on trade. Multilateral arrangements do not suit his temperament. He prefers bilateral arrangements in which the US can throw its weight around. He is not against negotiations, but these must be on his terms and culminate in an agreement in line with his image as a deal-maker. In this frame, strategic leadership or long-term considerations have no place.

Earlier this month, Indian Prime Minister Narendra Modi declined membership of the Regional Comprehensive Economic Partnership, the China-led free trade area.

India’s rejection of RCEP signals that the country does not intend to play a major role in shaping Asia’s future. It creates a genuine problem for those countries – the 10 southeast Asian nations, as well as Japan, South Korea, Australia and New Zealand – that signed on to RCEP expecting India to join. These governments will ratify the deal hoping that India, sooner rather than later, will take part in what they see as a crucial step in building Asia’s political architecture.

New Delhi’s decision puts China in a difficult position. The Belt and Road infrastructure initiative and RCEP supplement each other. They are part of Beijing’s strategy to ensure smooth access to the global economy by allowing exports and imports to flow freely. A quick glance at a map makes clear India’s importance.

China can no longer rely on labour-intensive or low-cost manufacturing as a main component of its economy. If India emerges as the next manufacturing powerhouse with financial and logistic support from China, both countries stand to benefit. Now, such a tandem seems a faraway prospect.

India’s political parties and business sector applauded almost unanimously the decision not to join RCEP. The media claimed the trade deal would have resulted in cheap Chinese goods crowding out Indian products, decimating jobs.

This reflects a lack of self-confidence. India’s deficit in relation to RCEP countries is more than $105tn, of which China accounts for half, but that warrants regulatory changes, not more protection. China used its World Trade Organisation membership to accelerate reforms. India could have done the same with RCEP, but chose instead to defend an economic structure that is incompatible with the exigencies of the global economy.

The longer India holds back, the more difficult the eventual adjustment will be. The more India depends on protectionism to ensure that inefficient domestic manufacturers can sell their products at home, the less competitive Indian companies will be. Such policies keep the Indian economy hostage and jeopardise long-run attempts to create jobs for the millions of young people entering the labour market.

Through the TPP and RCEP, the US and India respectively could have ensured the Asian power balance did not tip too far in China’s favour. This would have given the Association of Southeast Asian Nations more room for manoeuvre. The two countries’ disengagement from these deals poses a conundrum as the rest of Asia grapples with how to adjust to China’s rising power across the continent. It connotes an unbalanced Asia.

Joergen Oerstroem Moeller is Associate Research Fellow, ISEAS Yusof Ishak Institute, and a former State Secretary at the Danish foreign ministry.

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