Economic Relations Between Kenya and China, 1963-2007

Michael Chege, UNDP advisor to Kenya’s Ministry of Planning and National Development, conducted extensive in-country interviews to examine the perceptions and impact of China's engagement in Kenya for a CSIS case study.

In his analysis he argues that China’s resounding economic entry into Africa has been poorly served by most literature on the subject, which often depicts African economies under threat of malevolent Chinese investment strategies and a flood of cheap manufactured goods.  In the Kenyan instance, the Chinese-Kenyan relationship has by-and-large been mutually beneficial.

Chege challenges the assertions that increased imports from China have harmed the Kenyan economy, arguing that Kenya’s manufacturing output has risen and become more diversified while imports from China have been rising to record levels. Chinese construction firms are not inherently detrimental to Kenyan interests; they are a leading source of employment, and create infrastructure at lower costs, making Kenya’s economy more competitive overall. The study finds that most Kenyans are pleased with the transportation networks Chinese firms have provided, despite widespread criticism of inferior Chinese construction.

China’s share of Kenya’s external development assistance has increased dramatically, from .08 percent of total assistance in 2002 to 13 percent in 2005. In Kenya, there is no single predominant oil or other natural resource base. Accordingly, China’s investments are spread across multiple other sectors.

Kenya will need to carefully manage its bilateral relationship if it is to be successful in the long-term. Kenya continues to struggle to boost the volume of its exports to China in the face of a large surplus in China’s favor, and it will continue to be tested when Chinese businesses engage in poor environmental practices or illegal activity. Protectionism or limiting its cooperation with China will only harm Kenya in the long-run. Chege argues that Kenya’s competent technocratic cadre and business sector have thus far been able to manage the relationship to Kenya’s benefit. The larger enduring challenge, in his view, is for Kenya to come to terms with evolving global competition.