LESSONS FROM UNGA

US-China trade wars and what it portends for Kenya

Trade is used here as a tool of coercion and trade.

In Summary

• In this multilateralism, we need to question ourselves as Kenyans as to what is in it for us.

• Putting into consideration that those that engage with us do so for their own interests and their people, we should prioritise business opportunities that uplift our people from poverty by creating opportunities and jobs.

 

President Uhuru Kenyatta during the General Debate of the 74th session of the UN General Assembly in New York on Wednesday, September 25, 2019
President Uhuru Kenyatta during the General Debate of the 74th session of the UN General Assembly in New York on Wednesday, September 25, 2019
Image: PSCU

This week, I got the rare opportunity of attending the United Nations General Assembly for the first time.

Multilateralism is facing serious threat and there is no better example of two leaders who are so much in conflict in their style of leadership as presidents Barack Obama and Donald Trump.

While Obama promoted cooperation and multilateralism, Trump is more conservative, asking the nations of the world to first focus on their people. He cast a tired physique when he took to the podium with his eyes trained on countries such as China, Cuba, Iran and Venezuela, largely communist or socialist countries.

 

This brings to critical focus on the US agenda as the only superpower on the global stage under Trump’s leadership.

To begin with, it’s important to understand the shift in global political agenda as defined by the two leading economies currently ie China and America. While the US is the biggest economy globally, China has rapidly caught up in recent years, especially after joining the World Trade Organization.   What is interesting to note is that while China grew and developed many industries, thanks to a captive domestic market of 1.395 billion people, America was busy policing the world.

As a result, over 60,000 factories closed shop and millions of jobs were shipped to China. If not checked, the Chinese economy will in a matter of a few years overtake the US's.

In his address, Trump attributes this to a ‘wrong’ Chinese economic model that is predicated upon massive trade barriers, false technology transfer, currency manipulation, trading off trade secrets, market dumping, theft of intellectual properties and subsidies to state-owned enterprises.

On the other hand, China attributes its growth to its own shift in economic policy, industrialisation and a shift to a socialist market economy that is predicated upon the discipline of the Chinese Communist Party, internal reforms and the belt and silk road initiatives. I will deal with China’s political architecture in more detail in my future articles.

Trump avers that only democracy can bring prosperity to a nation, and while barraging President Nicolás Maduro, he invites the Venezuelan people to shun their socialist government in exchange for abundant American aid.

Trade is used here as a tool of coercion and trade. This is quite telling since when it comes to the UK, he is offering Boris Johnson, a ‘great trade deal’. He is, in effect, encouraging Brexit, basically UK’s divorce with continental Europe and especially Germany, as the main economic powerhouse of the EU.

 

We need to question ourselves as Kenyans as to what is in it for us. Trump avers that every country is for themselves. Putting into consideration that those that engage with us do so for their own interests and their people, we should prioritise business opportunities that uplift our people from poverty by creating opportunities and jobs.

China has risen to be the most important trading partner with Kenya since President Mwai Kibaki shifted our foreign policy to look East. While we have acquired huge debt due the massive infrastructural projects such as the standard gauge railway, it remains important to understand that the debt capacity portfolio under the Bretton woods institutions of World Bank and the IMF is highly underutilised. This is because of the fact that Chinese officials tend to compromise government officials in exchange for lucrative contracts.

On the other hand, the colonial slave-master mentality of western officials has led to a frosty relationship with us, more than 50 years after Independence as typified by the ICC cases. It can be argued that the move from a one-party state to political pluralism hasn’t necessarily led to economic growth.

The rule of law, a critical aspect of democracy has failed to find residence within the nation-state, especially when those charged with safeguarding the interests of the nation fail to do so when negotiating for deals with our trading partners.

Washington seems to focus less on Kenya and has a $1 billion fund to return migrants back to Kenya and other countries, under the USA Marafiki Program. This is interesting since the Kenyan diaspora is currently the biggest foreign currency earner with annual remittances totaling to Sh297 billion, more than coffee or tea.

Kenya needs trade, not aid. If true economic partnerships are to be realised for development, Kenya needs to be strategic to reap the best of the two of these competing powers, one democratic, another communist.

As Deng Xiaoping said, “It doesn’t matter if the cat is black or white, as long as it catches the mice”. However, a cat must exist to begin with.

Kenya needs to first know what it wants to reap maximum benefits. Its always good to start with the end game clearly in mind. For if Americans can be first, then Kenyans can be first too.

The writer is the Vice Chairman of Finance and Budget Committee of Senate

@mwauraisac1

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