China Africa relations

This study analyses the extent of China’s trade, foreign investment and aid in Kenya. The specific objectives of this study are to determine the size, composition and significance of Kenya’s exports to China, the composition and significance of imports of Kenya from China, and the composition and significance of Chinese investment in Kenya.

There is a lack of disaggregated and detailed data that could be of some help for the analysis of the nature and contribution of China’s Trade, FDI and aid in Africa. However, Kenyan and Chinese trade diplomatic relations have significant historical dimensions, starting with the Ming Dynasty. Although China embraced communism and Kenya at independence adopted a capitalist system, their relations have largely remained cordial. But the trade, investment and aid figures between Kenya and China are not that big when compared to other trading partners of Kenya such as the European Union (EU) and rest of Africa. Nevertheless, the recent patterns of trade, foreign aid, and diplomatic ties highlight important lessons for policy:

• there is increased proliferation of FDI through manufacturing and service sector in Kenya - Chinese interest in Kenya has also extended to mining and minerals exploration
  
• China views Kenya as a gateway to the Eastern Africa region and it has become a key focus of China’s trade and economic strategy in Africa
  
• the overall impact of China’s trade, FDI, and AID to Kenya is mixed - there are both gains and losses. Arising from the low price of imports of both consumer and producer goods, there are gains from the cheap products, quality not withstanding. On the same scale, local producers are the losers due to competitive pressure although they may get cheaper supply or producer goods.