Value of China imports drops for the first time in ten years

Imports from China have fallen for the first time in 10 years, fresh official data shows, underlining the slowdown in the world’s second largest economy. Data from the Kenya National Bureau of Statistics indicate the value of imports from China dropped 4.49 per cent to Sh306.47 billion in 12 months ended December 2016 from Sh320.88 billion a year earlier.

Imports include mobile phones, household goods and steel materials for the ongoing construction of the standard gauge railway project that will connect the port city of Mombasa to capital Nairobi by mid-next year.

The value of China’s imports have, however, remained above the Sh300 billion mark for the second year in a row, maintaining its position as the largest source of Kenya’s imports.

Chinese exports to Kenya jumped 29 per cent to Sh320.88 billion in 2015 from Sh248.64 billion in 2014, overtaking India, which had been the largest source of imports for years.

This was largely on account of huge shipments of building materials from China for building the SGR. Imports from India dropped by 26 per cent to Sh187.33 billion from Sh253.19 a year earlier, the KNBS data shows.

Other major sources of imports include the United Arab Emirates (oil), the United Kingdom, South Africa, Saudi Arabia, the United States, Germany, Netherlands and France.

“BEC  imports indicate that non-food industrial supplies was the main import category in December 2016 with a share of 35.1 per cent, while the values of machinery and other capital equipment, fuel and lubricants and transport registered shares of 21.0, 16.0 and 10.0 per cent, respectively,” the state’s statistician states in the Leading Economic Indicators report for December. “Food and beverage recorded a share of 7.4 per cent, while consumer goods not elsewhere specified recorded a share of 9.0 per cent.”

Local industries have been struggling to compete with the Chinese goods which move fast because they are affordable. The Kenya National Chamber of Commerce and Industry says China brings in low-quality machines, spare parts and telecommunications gadgets.

The World Bank last year warned that cheap Chinese imports may hurt Kenya’s bid to industrialise under the ambitious Vision 2030 development blueprint, with a possible closure of some industries.

The policy research working paper – Deal or no Deal: Strictly Business for China in Kenya? – indicated the growth of Kenya’s manufacturing sector is falling every year. The sector recorded a sluggish growth in 2016 as industries struggled to cope in a tough business environment, characterised by massive layoffs and closure of some businesses.

Tyre manufacturer Sameer Africa announced in September the closure of its Mombasa Road manufacturing plant in favour of imports from China and India.

The company’s managing director Allan Walmsley blamed the closure on competition from cheap and subsidised tyre imports mainly from China.

Battery maker Eveready shut down its Nakuru plant earlier in 2014, citing dumping of cheap imported batteries from China.

 

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