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Kenya – China trade imbalance, a growing concern

Kenya’s imports from China have grown exponentially over the years and while exports to the Asian nation continue to rise, albeit at a slow pace, economists now reckon that export numbers are hardly enough to narrow the balance of trade, heavily in China’s favour.

Data by the Kenya National Bureau of Statistics shows that Kenya’s total imports from China soared to 336.717 USD million in March this year alone, compared to 275.269 USD million a month earlier.

Kenya exports to China on the other hand stood at US$139.01 million in the whole of 2020, according to figures by the United Nations COMTRADE database on international trade.

Analysts now warn that the deficit remains too big and have recommended enhanced measures if the two trading partners are to compete favorably.

One of those measures is to push for the uptake of more Kenyan goods and products in the Chinese market, according to Kenya Investment Authority (KenInvest) General Manager of Investment Promotion and Business Development, Pius Rotich.

Other considerations include tax breaks and ‘softer’ credit facilities to boost local businesses, especially SMEs keen to export to the Chinese market.

“This is an ongoing engagement between ourselves, other relevant State agencies and all stakeholders involved,” said Rotich Wednesday during the opening ceremony of the 4th Kenya International Industrial Expo (KIIE) which kicked off yesterday in Nairobi expected to end on Friday.

The expo comes at a time when the country is scaling up its manufacturing sector in the post-Covid era and has attracted over 90 Chinese firms and 15 Kenyan brands exhibiting at the event.

Statistics show that over the last decade, China has grown to become the country’s largest trade partner and biggest bilateral lender – but at a cost, with sociocultural and political consequences working against Kenya – with mounting Chinese debt and a growing number of Chinese population taking over local informal businesses such as mitumba being some of the drawbacks.

China, Canada and Mexico are Kenya’s largest trading partners, accounting for nearly $1.9 trillion worth of imports and exports – a stroppy trade inequity in the ratio of 34:1 in China’s favour.

“Kenya- China trade is heavily skewed in favor of China. It is important to correct the existing trade imbalance to enable a fairer share of the benefits of trade,” said the Kenya National Chamber of Commerce and Industries (KNCCI) first vice president, Dr. Erick Rutto.

Over the years, according to the managing director of Afripeak Expo Kenya Ltd – the event’s organizer, Gao Wei, such exhibitions have provided both large and small businesses who use the platform to showcase their brands.

A recent National Economic Survey report by the Central Bank of Kenya (CBK) indicates that SMEs constitute 98 percent of all business in Kenya, create 30 percent of the jobs annually as well as contribute 3 percent of the GDP.

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