Kenya's dilemma: To look East or West?

The coming of powerful American personalities to Kenya in rapid succession has elicited many and mixed feelings, most of which are informed by history and some by nothing but sheer speculation.

The rivalry between US and China in global influence is evident. This rivalry is reminiscent of the Cold War period, where the United States and the Soviet Union fought for global control and dominance.

While the Cold War superiority contest played out on the ideological front, the one between China and the US is predominantly economical, but with some cultural undertones.

Economically, China and the US are heavily dependent on one another and the leadership of both nations know the demise of one automatically spells doom for the other. Peripheral economies like that of Kenya and other Sub-Saharan countries are dependent on these two superpowers, with the main disadvantage being that their contribution to the global economy, and especially to the economies of the US and China, is not significant, as much as they might want to believe so.

Their 'significant' contribution is in supply of selected vital mineral components that help in the manufacture of electronics and some that feed into the leisure industry. This can be picked from statistics on annual trade volumes of individual African countries compared to the total volume of global trade. A word of caution, though, is that Kenya, as a peripheral economy, stands to lose if its approach to global politics and economics continues to be ad-hoc.

Now that the US is renewing its commitment to partnering with Kenya on security issues, political and economic development, why would someone suggest that it is time the 'Look East' policy is put on hold? This kind of thinking lacks in analysis and understanding of the present and future directions of the global political economy.

For more than two decades, beginning in the 1990s, the Chinese economy witnessed an average double-digit growth, spurring itself into the second largest economy in the world, and is poised to overtake the United States of America in a number of years from now.

Last year, some sources, including the International Monetary Fund, which used the purchasing power parity (PPP) to calculate the size of both the USA and China's economies, concluded that China had indeed knocked off the USA from the dominant economic position it had held since 1872, making itself the largest world economy.

Currently, China is growing at a single-digit rate averaging 7.7 per cent per annum, and this has world economies, including the United States, worried since China's contribution to the growth of the global economy is significant: about 3 per cent since 2008.

The Economist argued that a slowdown in Chinese economic growth would severely affect countries with strong ties to it, like Japan, and lead to a drop in the gross domestic product (GDP) of USA and the Eurozone.

Sub-Saharan Africa and Latin American countries that have been receiving a boost from China in terms of growing trade, investment and market linkages will also be severely affected.

The foregoing argument emphasises the importance of China in global economics and consequently on our economy and geopolitics. It is therefore crucial that we truthfully and correctly evaluate and portray our position as a country as regards our relationship with China and the United States of America.

It is also important to be both realistic and pragmatic in our orientation and economic alignment; be it by way of 'Look East', 'Look West', or 'Look Anywhere' approaches. The article by Macharia Gaitho in the Daily Nation on Tuesday is flawed in this aspect. It is more political than it is economic.

However, what Kenya needs is less international politics, but more thoughts put into international trade and investment policies laced with a higher sense of pragmatism.

Looking at it as it is, no one has ever complained of being able to afford a mobile phone, clothes, shoes, toothpicks, home electronics and appliances, glass, furniture, roads, railways, dams, and many more, most of which have, wholly or in part, linkages to or sources in China, the key term here being affordability.

Local Kenyan manufacturers and Chinese competitors from other countries lament because their profit margins have been reduced and some have been pushed out of business as a result of the resurgence of China in global business. This is part of the 'Factory Asia' effect.

But that is how business is carried out, respecting the basic principles of economics: that there is scarcity and people have to choose; that you always forego something when you make a choice; that the market forces and economic systems help resource allocation; that incentives can help people make certain choices; that a nation or an individual will not enter an economic relationship in which s/he knows will lose.

All the economic principles are in play in the engagement between Kenya and China and the renewed economic interest between Kenya and the United States.

Engaging China comes with goodies, some coming with a bitter side dish, and so is engaging the United States of America.