Ambassador Wu Peng's speech for the 6th Press Club Meeting

On May 21st, Chinese Ambassador to Kenya Wu Peng attended the 6th Kenya Editors’ Guild Press Club Luncheon and gave a keynote speech on major issues in China-Kenya cooperation, China-US trade dispute, and the “Belt and Road” initiative. Ambassador Christopher Chika, Director for Asian and Australian Affairs from the Kenyan Ministry of Foreign Affairs, Churchil Otieno, President of the Kenya Editors’ Guild, Joe Ageyo, Editorial Director of Royal Media Services, and Adam Lane, Senior Director of Public Affairs and Communication at Huawei also addressed the luncheon. Senior editors and journalists from all mainstream media in Kenya including Daily Nation, The Standard, Citizens, KTN, Capital FM, BBC Kenya, CCTV Africa, and Xinhua News Agency Africa, and Counselor Wang Xuezheng from the Chinese embassy, and President He Shi of Huawei Kenya were also present.


On behalf of the Kenyan Ministry of Foreign Affairs, Amb. Chika reaffirmed that Kenya-China relations are mutually beneficial, and that Kenya is willing to work together with China to promote the development of their bilateral and regional friendly relations, as well as multilateralism. The Kenyan media spoke highly of Amb. Wu’s openness to the media, hoping that the embassy continues to release authoritative information on issues to the interests of the Kenyan media. Amb. Wu answered questions on the standard-gauge railway contract, cultural integration for Chinese businesses and citizens in Kenya, and related business projects. The following is the transcript of Amb. Wu’s speech.


Chairman Mr. Churchill Otieno,


Friends of the Kenya Editors Guild


Ladies and Gentlemen,


Good afternoon!


Let me start by expressing my gratitude to KEG for inviting me to this luncheon. Indeed, it is my pleasure to meet the media and friends in Kenya in an informal setting such as this one. I’m greatly honored to make a speech.


I wish to share my views on three parts, focusing on topics which are of mutual concern and interest as follows:


I. China-Kenya relations


The rapid development of China-Kenya cooperation has aroused broad attention globally due to the hard work of people from both countries. Ever since I arrived in March, the first thing I do every day is to open up and read through all major newspapers, picking up your comments on China, or news on China-Kenya cooperation.


Public opinions differ due to various reasons. But on the Chinese side, we always cherish the China-Kenya partnership. China-Kenya diplomatic relations have been already 56 years old. The relations, like a big tree, have developed with deep roots and thick foliage.


Deepening of mutual political trust, and expansion of all-around cooperation have pushed China-Kenya relations to the level of a Comprehensive Strategic Cooperative Partnership.


China's non-financial direct investment in Kenya has recorded double-fold increase to about 520 million USD in 2018. Now we have over 400 Chinese companies in Kenya, creating Tens of thousands of jobs for local community.


Both sides enjoy frequent exchanges in education, science and culture. The China-Africa Joint Research Center and China-Kenya Laboratory for Crop Molecular Biology have been operating smoothly in Kenya. Since 2015, China has provided over 67,000 training opportunities for Kenyan. Currently, over 2,400 Kenyan students are studying in China. In 2018, over 81,000 Chinese tourists travelled to Kenya for leisure and adventure.


II. Three hot topics on China-Kenya partnership


I) So called ‘Debt Trap’


Debt is a topic that both Kenya and the international media are very interested in. I have heard much criticism on the Kenyan debt burden, including loans from China.


As a matter of fact, no country has been trapped in a debt crisis due to its cooperation with China. If you don’t agree, please just give me one example. China's funding to Kenya and other developing countries is aimed at development. China always attaches high importance to debt sustainability. Before making decisions, Chinese companies and banks, even the third party, go through rigorous feasibility studies, evaluation, and review of a country’s credit rating. Huge infrastructural projects like SGR may take time to yield returns, but they are solid and valid assets, whose value will grow in time. In the long run, they are beneficial to the host countries. By the way, the commercial situation of SGR is quite good by now.


II) The famous Standard Gauge Railway


SGR is a flagship project which showcased the fast speed and high quality of China-Kenya cooperation.


The building of Mombasa-Nairobi SGR has driven the Kenya's economic growth by 1.5% and created 46 thousand jobs for local residents. Mombasa-Nairobi Phase operation has employed 2125 Kenyan nationals, Kenyan staff accounts for 75%; Nairobi-Naivasha Phase construction has employed 5424 Kenyan nationals, Kenyan accounts for 86%.


SGR operation shortened the Nairobi-Mombasa trip from over 10 hours to 5 hours. Since its launch in May 2017, with an average booking rate of 99%, over 2.77 million passengers have traveled by the SGR, and around 4.2 million tons of goods have been transported.


In the first full year of operation, SGR earned nearly Sh10.33 billion, which is very close to the operation cost of Sh12 billion a year. For an infrastructural project of SGR’s magnitude, it is impossible to achieve near break-even in one year. Its first year’s economic benefits was beyond the expectations of the feasibility report. Actually, the Kenyan SGR has performed better than most railway projects of the same class in the world.


That is why President Kenyatta commented, “SGR has become a story of remarkable success and national pride”. He is proud because SGR is one of the main flagship development projects in Kenya and even Africa.


The spillover benefits of SGR for the Kenyan economy are many and promising. CNN ranked “taking the SGR train" as one of the best five things to do in Kenya. Tourism has already turned out to be one of the biggest beneficiaries of the SGR.


China and Kenya and other development partners are discussing on the construction of the Mombasa Special Economic Zone and the Naivasha Industrial Park. With the development of the industrial chain from railway transportation, port economy to industrial parks, we have every reason to believe that SGR will benefit Kenya’s efforts towards industrialization, and strongly boost Kenya’s GDP growth.


Some media have expressed concerns about the so called secrecy clauses. I can assure you that any loan agreements between China and Kenya are in line with common international best practice. None of Kenya’s national assets has been mortgaged for the SGR loan, neither would any single Kenyan national asset be seized nor controlled by China, even in a situation of default.


Currently, newspapers are full of debate on the much anticipated SGR Phase 2B. I can confirm that funding for Naivasha-Kisumu SGR was not on the agenda of the two Presidents’ recent meeting in Beijing. The Government of Kenya is now focusing on operations of the Mombasa-Nairobi SGR to maximize its overall effects, which I believe is a very smart and responsible decision.


Indeed, Rome was not built in a day. China supports Kenya’s efforts to improve her infrastructural connectivity, which is key to the country’s economic development.


However, China will work closely with the Kenyan government in undertaking infrastructure projects, based on economic viability.


III) About Trade


A lot of issues have also been discussed about the China-Kenya trade imbalance. In terms of economic attitude, the bilateral trade balance is ultimately determined by the economic structures, industrial competitiveness and international industrial specialization. It is unfair to blame any side.


China's experience in foreign trade fully proves this truth. China's trade was in deficit for most of the years before 1990. Afterwards, with China largely accepting the international industrial transfer, competitiveness in manufacture became stronger, exports gradually exceeded imports, and China's trade in goods turned from a gross deficit to a gross surplus.


China does not pursue a policy of trade surplus with Kenya. Actually, we are paying great attention to Kenya’s desire to expand exports. President Kenyatta was absolutely right to put industrialization as a priority of the country’s Big 4 development agenda. Only through industrialization can Kenya reduce imports and promote exports. On this, China is always ready to lend a helping hand.


Senda Group, for example, has made successful investment in production of Twyford Ceramics( or tiles). It’s output is already meeting 85% of Kenyan market needs. Those tiles would otherwise be imported, but are now made in Kenya, and even being exported to neighbouring countries. Moreover, Senda is now investing 23 million USD on a FMCG(fast moving consumer goods) project which produce diapers, washing powder and soaps. Once the project completes construction and starts to run in July this year, the FMCG production will be exported to East African countries. This is a model of import substitution industry, which will make the trade deficit double down and earn foreign exchange income for Kenya.


As a good brother, we understand how important agricultural exports are to Kenya. Consequently, we have been working hard to expand China’s imports for Kenya’s agricultural produce. Last year, China and Kenya signed an agreement on export of stevia to China, and an SPS MOU, which paves way for Kenya’s access of horticultural products into the Chinese market.


At the same time, we have signed an agreement on the Export of Frozen Avocados, which makes Kenya the first African country to export avocados to China. I have noted concerns that it is expensive for small farmers to have their fruits frozen, yet they can sell their produce to the processing plants. An example of the latter is Vertical Agro, one of the largest growers, processors and exporters of frozen avocados in Kenya. My Embassy’s Commercial Counselor has already visited the firm to discuss ongoing progress in exporting avocados to China.


We are still working to seal the deal on export of fresh avocados, as well as working on other horticultural products. The only challenge is the concern of biological safety, which must be based on scientific study. I believe, with the growing need in China for high-quality agricultural products, Kenya’s agricultural exports to China will increase gradually.


Talking about trade, I would like to say a few words about China-US trade talks. As you may know, While the talks having made important and substantial progress, the attempt of US side to exert extreme pressure had only led to a justified counterattack.


China addresses differences through consultation and negotiation. Yet consultation is not a one-way street, and should be based on equality. It takes sincerity, responsibility to make a consultation meaningful.


China is always open for talks but it would fight to the end should a “trade war” break out. The recent announcement on countermeasures is proof that China is fully prepared. Chinese measures are not only to safeguard our own due rights and interests, but also to maintain the basic rules of the multilateral trading mechanism.


Any responsible country would not think about “us first” at the expense of others. China will not allow Kenyan friends to get caught in the middle of US-China trade frictions. This trade dispute will not affect China-Kenya trade relation.


III. Kenya’s place in the Belt and Road Initiative


Belt and Road Initiative (BRI) must not be new words to you. Yet, people are not quite sure what BRI has to do with Kenya. I am glad to share my viewpoints in this regard.


Kenya has been an important link between Africa and China since ancient times. 600 years ago, Zheng He’s fleet brought along porcelain and silk to Kenya. The King of Malindi sent envoys to China with a giraffe as a gift. This history naturally leads Kenya to be one of the most important BRI partners.


SGR became one of the benchmarks and models of BRI in Africa, due to its significance to the upgrade of Kenyan infrastructure. It has connected Kenyan counties, and it will eventually connect the East African region.


In the annex of the Joint Communique of the recently concluded Belt and Road Forum in Beijing, two projects for Kenya and neighbours were included. These are the Lamu Port-South Sudan-Ethiopia Transport Corridor, and the Northern Corridor Trade Route in Africa. As noted, the SGR will not stop at Naivasha. More economic connectivity will be built, as this is the request of African countries.


Indeed, relations between China and Kenya are much broader than the SGR. If you follow my Embassy’s Twitter and Facebook pages - Chinese Embassy in Kenya, you will notice that during the second BRF, China-Kenya signed agreements on the Konza Data Center and Smart City Facilities Project, implementation of the Economic and Trade Measures of the FOCAC Beijing Summit, the Export of Frozen Avocado Fruits from Kenya to China, Nairobi JKIA-James Gichuru Road Expressway PPP Project, among others.


Finally, let me reiterate that I respect the media and its freedom to criticize. But I also believe that you can cover more positive stories in order to build up investor confidence in the country, thus promoting the growing friendship and cooperation between China and Kenya. I will join hands with all friends of Kenya in pushing our bilateral relations to new heights and to bring tangible benefits for the people of our two countries.


Thank you! Asanteni sana!