China has just emerged as the world’s largest economy, finally overtaking the United States. China’s economic growth over the last two decades has been nothing short of spectacular, and it now has the largest middle class population in the world, some 300 million Chinese. China with her 1.357 billion people is courted by the European Union and the United States, and Western businesses. Yet China’s political economy is a paradox at three levels. Firstly, China is both a developed and a developing country. Though economically ascendant, millions of Chinese still live in poverty as the state struggles to raise their standard of living and to find resources to develop its backward provinces especially in the West. Secondly, China is a command economy with a significant market component. This explains the peculiarities of its economic system, in which the largest multinational companies such as Sino Hydro, which are state-owned-enterprises, co-exist in the market with several privately owned businesses. Thirdly, China is only now transitioning from being a factor-driven economy to being an efficiency-driven one. It is yet to graduate to the third and highest level and become an innovation-driven economy. China’s developed/developing status explains what has been described as the “three faces” of China in Africa: the presence of the Chinese state, private multinational companies, and individual adventurers in Africa looking for economic opportunities.
Africa, Ghana and China – Tale of Three Economies
China has become a significant economic force in Africa since 2000. The value of China’s trade with Africa has grown astronomically from US$1 billion in 2000 to an estimated $198.4 billion in 2012. It can be argued however that the abundance of natural resources in Africa has led Beijing to seek long-term deals with African governments that ensure continued access to the continent’s raw material needs and sources of energy.Nevertheless, from an African perspective, economic cooperation with China, if managed properly, could produce very positive economic effects.
Ghana has made fairly steady political and economic progress. Its democratic credentials have been strengthened by successive peaceful changes in government through elections since 1992. Economically, Ghana became a lower middle-income country in 2010. A long-standing Ghanaian objective has been to diversify its economy from an inordinate dependence on the export of primary materials such as gold, cocoa, and now oil.  With a clear focus on the ECOWAS region where Ghana’s trade reflects a strong manufacturing component and tactically exploiting the Chinese presence in the nation’s manufacturing, construction, tourism, service and agriculture sectors, Ghana can re-engineer her economy.
 
Ghana and China: Seizing the Opportunities for Growth
The problem Ghana had with illegal Chinese miners which climaxed in the setting up of a government task force in 2013 and the deportation of several Chinese citizens and the vexing complications that have attended the repayment and disbursement terms of the $3.0 billion Chinese loan in the oil sector need not eclipse the big picture: that the majority of Chinese companies (both state and private) and entrepreneurs are investing legally across many sectors. China presents Ghana with a compelling alternative trade and developmental partnership, which, if properly managed, has the potential to  transform the living standards of Ghana’s citizens.
What should Ghana do?  Ghana should continue to engage Chinese state-owned enterprises that focus on construction and the very established private companies such as Huawei Technologies to develop a nationally integrated infrastructure with a focus on roads, electricity, water, and ICT. The Ghanaian state should play the leading role in this regard, making use of China’s resource-backed infrastructure loans.  It is important also that Ghana should explore the model of Economic and Trade Cooperation Zones pioneered by China. These zones will run on a triple helix of Chinese and African governments, and established Chinese enterprises. A clear role needs to be found in this endeavor for Ghanaian capital and the Ghana government has to think strategically of which areas of the economy it wants to prioritize as drivers for national economic development. Ghana’s economic competiveness has to be directed at regional, intra-African, and South-South trade. The government has to choose strategic economic areas to develop anchored in Special Economic and Trade Cooperation Zones, and aggressively facilitate technology transfer in these areas.  Ghana’s engagement with China should not be divorced from the larger ECOWAS agenda, as it is within this sub-region that Ghana can grow its manufacturing potential. The fourth recommendation is counter-intuitive. After the fiasco with the illegal Chinese miners, and the growing local resentment of Chinese intrusion into retail and wholesale trade in Ghana, it is easy to dismiss the third face of China, the individual Chinese seeking economic opportunities in Africa, as parasitic. Many are interested in entering into manufacturing (and have actually done so according to our field research) and the Chinese have set up business associations in Ghana. The Government of Ghana should work with the Government of China, their respective embassies, business promotion enterprises and chambers of commerce to put together relevant information on investing in Ghana for Chinese investors. Chinese investors should be directed into sectors and geographical areas earmarked for development by the Ghanaian government with tax breaks as incentives. Some may enter into joint ventures with Ghanaians; others may go it alone.. The size of China’s middle class is almost as large as the total American population, and it is growing. As a market and potential investors, this middle class Chinese population can become an important driver of growth for Ghanaian businesses as their manufacturing models are more replicable for Ghanaian capital than that of multinational giants like Huawei Technologies. Ghana needs to continue to grow its agricultural sector as a base for manufacturing, and expand labor-intensive manufacturing with increasing technological content; Chinese technology, know-how and experience should play a vital role.
To operationalize these recommendations and provide the necessary form and direction Ghana needs as a matter of urgency a China Policy Document which spells out, among other things, the guiding geo-political framework, time frames, key sectors, central institutions, strategic deliverables, mechanics for constant engagement and dispute resolution in a clear and concise manner.
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