Why Kenya-China zero-tariff deal has stalled

President William Ruto with his Chinese counterpart Xi Jinping at the Great Hall of the People in Beijing, China. [PSC] Kenyan exporters are voicing alarm over what they see as a slow pace by Nairobi in finalising a crucial and much-anticipated zero-tariff trade agreement with Beijing. The deal is seen by local traders as a vital hedge against the recent loss of duty-free access to the United States (US) market. The friction is emerging despite public assurances from Beijing that it is ready to move forward. Chinese Ambassador to Kenya Guo Haiyan has publicly championed the initiative first announced in June this year by Chinese President Xi Jinping. The Chinese ambassador this week reiterated a promise to work with the Kenyan government to ensure the new zero-tariff measures take effect "at an early date." The ambassador stressed again during a public forum that China's zero-tariff offer will decisively "boost Kenya's exports" by granting market access for nearly all products. Ambassador Guo, in the statement made during a public forum framed the zero-tariff policy as part of the broader "China-Kenya Community with a Shared Future for the New Era," a partnership elevated after President William Ruto's recent state visit to Beijing. By eliminating tariffs across 100 per cent of tariff lines for African countries, analysts say China is positioning its offer "as a stable, unconditional alternative to the trade volatility experienced with Western powers." "Evolving from world factory to world market... China's economy has achieved both quantitative expansion and qualitative improvement," ambassador Guo said last week, positioning Beijing as a reliable engine ready to "inject strong impetus into the world economy." "We look forward to Kenya benefiting from China's zero-tariff measures at an early date." For Kenyan exporters, however, the gap between Beijing's diplomatic assurances and the speed of implementation by Nairobi is creating commercial anxiety. A section of business leaders and traders reckons Nairobi is "dragging its feet in implementing the new deal," fearing that bureaucratic delays in Nairobi will squander the immediate competitive advantage. a This frustration is exacerbated by the pressing need for a new market, they say. The expiration of the US African Growth and Opportunity Act (Agoa) and the resumption of a 10 per cent tariff on Kenyan goods to the US have left exporters, particularly those in the labour-intensive textile and horticulture sectors, facing an uncertain trade future with the US. The Beijing zero-tariff deal is meant to immediately open China's market of 1.4 billion consumers, helping to address Kenya's massive trade imbalance with Beijing, which is its largest source of imports. "Any delay prevents businesses from pivoting their supply chains and marketing efforts towards high-demand Chinese niche products like speciality coffee, macadamia nuts, and avocados," said a business leader who sought anonymity. Prime Cabinet Secretary Musalia Mudavadi earlier confirmed that a Kenyan delegation is already negotiating the technical framework. But with this year (2025) coming to a close and no deal in sight, exporters are growing jittery. Financial Standard could not immediately reach the Kenyan Foreign Affairs ministry for comment. Business leaders, however, said they are anxious ahead of year-end with no end in sight for the conclusion of the trade deal. "Every week of delay translates to lost opportunity and prolonged uncertainty in a volatile global trading arena," said one manufacturer who spoke anonymously to speak freely. "We hope for swift action as the year comes to an end so we can secure new markets." On June 11, 2025, at the China-Africa Economic and Trade Expo in Changsha, China, announced a sweeping trade commitment to remove all tariffs on exports from 53 African countries. This move grants African nations duty-free access to the world's second-largest economy, potentially lowering export costs and making African goods more competitive in the Chinese market. For the first time, this access would extend not only to the least developed economies but also to middle-income countries such as South Africa, Kenya, Nigeria, and Egypt. As US trade tensions escalate, Kenya has in the recent past deepened its economic ties with China, leveraging Beijing's expanded zero-tariff policy for African goods. President William Ruto's April state visit to China yielded 22 new agreements, including infrastructure deals and pledges to boost Kenyan agricultural exports like coffee and avocados. During his visit, Kenya and China elevated their relationship to a strategic partnership and signed 22 Memoranda of Understanding (MoUs) across infrastructure, trade, health, and security. These agreements included crucial commitments to extend Kenya's Standard Gauge Railway (SGR) beyond Kisumu to Malaba and dual the Nairobi-Malaba road from Limuru, both cornerstones of China's Belt and Road Initiative in East Africa. Discussions also covered direct air links and increased imports of Kenyan produce by China, particularly coffee and avocados. "China offers an alternative market at a critical time," said Trade Cabinet Secretary Lee Kinyanjui at the time, even as he acknowledged the "challenges" posed by US tariffs. For the longest period, the trade balance between Kenya and China has been heavily skewed in Beijing's favour. Kenyan imports from China have surged dramatically over recent years, climbing by more than half to Sh576.1 billion ($4.44 billion) in 2024 from 361.3 billion ($2.78 billion) in 2020. This trend was underscored by a 25 per cent year-on-year increase from Sh458.9 billion ($3.53 billion) in 2023, with machinery and transport equipment forming the bulk of these inbound shipments. While Kenya's exports to China also saw a notable increase, jumping 77.8 per cent to Sh26.3 billion ($202 million) in 2024 from Sh14.7 billion ($113 million) in 2023, this growth was overshadowed by a 9.12 per cent year-on-year drop from the Sh28.9 billion ($222 million) recorded in 2023, further exacerbating the trade deficit. "China's decision to negotiate and sign the China-Africa Economic Partnership for Shared Development, offering zero-tariff treatment on 100 per cent of tariff lines for 53 African countries with which it holds diplomatic ties, marks a historic milestone," said Shen Shiwei, a China watcher and non-resident researcher at the Institute of African Studies of Zhejiang Normal University, in emailed comments to Financial Standard. "As a leading global player and the first major developing economy to implement such a sweeping initiative, China demonstrates not only its commitment to South-South cooperation but also its role as a catalyst for equitable global development. This move directly addresses the aspirations of the Global South, echoing the urgent need for inclusive growth and economic empowerment." The expanded zero-tariff policy, which became effective last December, was officially announced by Chinese Foreign Affairs Minister Wang Yi during the Ministerial Meeting of Coordinators on the Implementation of the Follow-up Actions of the Forum on China-Africa Cooperation (FOCAC). The policy's rollout coincided with the Fourth China-Africa Economic and Trade Expo (CAETE) held in Changsha, Hunan, a southern Chinese city that saw significant participation from Kenya and African officials. Chinese President Xi Jinping framed the move as providing "new impetus" for shared development amidst global "changes and turbulence." Wang Yi reiterated President Xi's vision of fostering an "all-weather China-Africa community with a shared future for the new era," aimed at countering global uncertainties with stability and resilience. Despite Beijing's diplomatic overtures and the new policy, Chinese officials have expressed concern about the pace of African uptake. Du Xiaohui, Director-General of the Chinese Foreign Ministry's African Affairs Department, highlighted a noticeable "apathy" from African producers in fully leveraging this unprecedented market access. "We have not seen sufficient applications from African countries to take full advantage of this," Du told reporters in Beijing. "We are working closely with relevant Chinese authorities and our African partners to better facilitate imports." He urged African producers to be proactive, familiarise themselves with Chinese market entry requirements, especially for high-potential products such as cashews and avocados. "This zero-tariff treatment is a golden opportunity. If you get yourself familiar with how to enter the Chinese market, you will win a huge market," Du stated, assuring Beijing's commitment to providing essential "trade facilitation measures" and capacity building. He noted that specialised measures, including inspection and quarantine protocols for specific products, are being worked on in collaboration with African nations. Analysts, however, cautioned that while tariff removal is a significant step, its full impact on Africa's long-term economic transformation requires additional factors. "Consequently, African nations like Kenya will need to boost manufacturing capacity, address non-tariff barriers, and integrate into global value chains to fully capitalise on the initiative, as the trade composition remains skewed towards African raw material exports and Chinese manufactured imports," an analyst noted. Previous zero-tariff policies often saw benefits concentrated in low-value commodities, raising questions about broader economic impact. Professor Yao Tang of Peking University suggested Kenya could become a regional manufacturing hub, leveraging rising production costs in China and excess capacity due to US tariffs. "If you want to sell cars in Kenya, then you need to set up some operation here, right? So that would generate local employment and also technology build-up," Tang told Financial Standard. Executive Director of Governance and Diplomacy Associates Kinyuru Munuhe stated that "Kenya is at a critical juncture and leveraging its relationship with China can significantly boost its economic prospects and shape its role in the evolving global economic order." Professor Dr Wang Yiwei of Renmin University of China advised African nations to reduce economic reliance on the US and diversify trade partners, emphasising that "China's modernisation [is] for all of the countries."

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Why Kenya-China zero-tariff deal has stalled

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