Inside Ruto's high-stakes China visit amid raging global trade war

President William Ruto hold bilateral talks with Chinese President Xi Jinping at the Great Hall. [PCS] Analysts suggest President Ruto's visit presents a unique opportunity for Nairobi to leverage the US-China fallout to Kenya's advantage. Talks with President Xi Jinping also expected to centre around debt and financing for major infrastructure projects. President William Ruto is set to embark on a crucial five-day state visit to Beijing, China, commencing Tuesday. The visit comes as Kenya grapples with mounting economic pressures and as the cash-strapped Kenya Kwanza administration seeks to navigate local economic headwinds but also the turbulent waters of the ongoing US-China trade conflict. The visit also arrives at a pivotal moment for Ruto's recently reorganised government, which is heavily indebted to China and urgently requires financial support to stabilise the economy amid mounting pressure from Kenyans. "At the invitation of President Xi Jinping, President William Ruto of the Republic of Kenya will pay a state visit to China from April 22 to 26," confirmed a Chinese Ministry of Foreign Affairs spokesperson on Thursday, signalling the importance Beijing attaches to this engagement. President Ruto's agenda is expected to be dominated by requests for the revival of stalled infrastructure projects, notably the extension of the Chinese-funded Standard Gauge Railway (SGR), a critical artery for regional commerce, government insiders told Weekend Business. Discussions will also focus on securing funding for road network improvements and the expansion of key port and airport facilities, according to Chinese authorities. However, diplomatic watchers said the visit is not merely about securing loans; it's also about strategically positioning Kenya in a rapidly shifting global landscape. The backdrop to the visit is the escalating trade war between Washington and Beijing, marked by reciprocal tariffs that have disrupted global supply chains and impacted Kenya's export-dependent economy. The Trump administration has not spared its long-time ally Kenya after it imposed a 10 per cent tariff, a decision that has angered Nairobi, insiders said. The tariffs have since been paused for 90 days, but the situation has reportedly strained relations between Nairobi and Washington, prompting a reassessment of Kenya's reliance on traditional Western partners, officials said. Analysts suggested in interviews that President Ruto's visit presents a unique opportunity for Nairobi to leverage the US-China fallout to Kenya's advantage. Instead of solely seeking further loans, Nairobi could push for collaborations that foster local production capacity and technology transfer, boosting jobs and aligning with Beijing's search for new allies amidst rising trade barriers. "If you want to sell cars in Kenya, then you need to set up some operation in here, right? So that would generate local employment and also technology build-up," said Professor Yao Tang of the Guanghua School of Management, Peking University, in an interview. He highlighted the potential for Kenya to become a regional manufacturing hub, noting that rising production costs in China and excess capacity owing to the Trump tariffs on China could make such arrangements increasingly attractive for Chinese companies. Shen Shiwei, a research fellow at the Institute of African Studies of Zhejiang Normal University, echoed this sentiment, emphasising the potential for Kenya to diversify its exports through strategic partnerships with China. He suggested in a separate interview that Kenya could seek support in "deepening trade in value-added agriculture, textiles, and digital services and boosting investments in manufacturing," thereby tapping into China's vast market and supply chains as a hedge against protectionism. Kinyuru Munuhe, the executive director of Nairobi-based think tank Governance and Diplomacy Associates, underscored the significance of this moment, highlighting China's growing influence in Africa. He pointed out via email that China's technological and financial capabilities, coupled with its vast labour resources, create a compelling incentive for African nations like Kenya to strengthen ties. Beyond infrastructure projects, Kenya could strategically seek Chinese support in establishing Special Economic Zones (SEZs) focused on manufacturing for both local and regional markets, technology transfer and skills development, and agricultural value addition. Diversifying financing options through further issuances of Panda bonds is also expected to be on the table, officials said. President Ruto's past criticism of Chinese lending practices adds a layer of complexity to the discussions. However, the current economic and geopolitical realities necessitate a pragmatic approach, experts said. The outcomes of Ruto's visit will be closely monitored by both Washington and other international actors, keen to understand the evolving dynamics of China-Africa relations. The visit is a high-stakes balancing act for Ruto, seeking to secure crucial economic support from China while navigating the broader geopolitical landscape, officials said. The decisions made in Beijing could have far-reaching implications for Kenya's economic future and its position in the evolving global order, with the world watching closely, they added. According to Astrid Haas, an Urban economist at the African Development Bank in a recent article in The Conversation, over the past two decades, African leaders have become increasingly drawn to Chinese financing and investment. "These investments are made rapidly and with reportedly less stringent conditions than traditional financing sources," wrote Haas. "Some also suggest that China's approach aligns more closely with African priorities." This sentiment was summarised by the former president of Senegal, Abdoulaye Wade, in 2008: "China's approach to our needs is simply better adapted than the slow and sometimes patronising post-colonial approach of European investors, donor organisations and non-governmental organisations ... China has helped African nations build infrastructure projects in record time." African leaders who attended last year's 8th Forum on China-Africa Cooperation in Beijing no doubt, wanted to attract more Chinese finance and investment. The forum aimed to promote diplomacy, trade, security, and investment relations between China and Africa. According to Haas, since the inaugural summit in 2000, Beijing has committed over $170 billion (Sh21 trillion) in grants and loans to African countries. "This has included highways, ports, and urban rail. One outcome of these investments has been that they have begun actively shaping the continent's cities. And the future investment African leaders seek is even more urgently needed to support African cities in becoming more productive, liveable, and sustainable," wrote Haas. "The challenges facing cities were the focus of discussions at the inaugural Africa Urban Forum in Addis Ababa, the Ethiopian capital. The event was aimed at helping shape and support inclusive human settlement development. "Though likely coincidental, the juxtaposition of these events is a reminder that the investment African leaders seek in Beijing is needed for African cities. As an urban economist with a focus on financing public infrastructure and services, I am interested, as part of my research comparing Africa's and China's urbanisation experiences, in understanding why Africa has not benefited from Chinese investments and how to change this trend," wrote Haas in The Conversation article. "China has influenced Africa's urbanisation through the Belt and Road Initiative. Launched in 2013, this infrastructure project aims to create a network of economic and trade routes connecting China and the world. "As of December 2023, 44 of 54 African countries had signed on to the Belt and Road Initiative. It's estimated that through this initiative, China has invested 2.5 times more in African infrastructure development than all the Western countries combined."

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Inside Ruto's high-stakes China visit amid raging global trade war

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