Cement may pave Africa's road to the future, but... China

[frigidmagi]

CSMonitor

[quote]Les Ciments Du Gabon was for decades the only building material company that the equatorial seaside African country of Gabon ever knew – a national monopoly that churned out some 250,000 tons of cement annually in beige and blue sacks that transmogrified into Libreville’s skyward-spiraling condos and government ziggurat

Then came the imports: cement shipments from Cameroon, Kazakhstan, and most of all China.

Now, as of this week, Les Ciments’ executives are saying they may close their kilns – for good.

“Chinese cement is sold at a price that doesn’t allow [us] to compete,â€

[Hadrianvs]

That's an argument in favour of tariffs to protect local industry still in infancy. All the industrialized parts of the world did it in the 19th and early 20th centuries, to enhance domestic competitive advantages and minimize those of foreigners. The problem is that the modern paradigm is all about free trade. This works very well for nations that are industrialized or in the late stages of industrialization, but not so much for those still near the bottom of the ladder. The best way forward, then, is for African governments to impose very modest tariffs. It is better than nothing, but less likely to get on the bad side of the major world powers.

[The Minx]

Um, no: tariffs have a way of backfiring on the country that imposes them. What would the African nations do if the Chinese started reciprocating in kind, starting a trade war of their own? China has far more muscle for that sort of thing than Africa does.

Besides, just because it was done in the 19th century does not mean that it is wise. The "infant industry" argument doesn't work when you examine the hidden costs to a society. Remember that while the fact that Africa can import cheap Chinese cement may be bad for local manufacturers of cement it is good for anyone else who is using it. They're basically buying cement which is effectively subsidized by the Chinese people. Protectionism was abandoned for a reason: people recognized that it is bad for a country overall even if it is good for special interest groups.

The result is that at the end of the day, this is a lot worse for the Chinese worker (who has to make do with an artificially low-value pay-check) than it is for the emerging African economies.