African nations brace for China slowdown

Three countries could be especially hit by a "triple whammy".

One under-explored aspect of the prospect of a slow-down in Chinese growth — a so-called "hard landing", which some have inferred from the declining returns on infrastructure spending in the country — is that it will hit hard for the poorer countries which have chosen to rely on China.

China has been outsourcing its own outsourced work for some time. The BBC reports from "China Town" outside Addis Ababa, which is very different from the Chinatowns of the west:

Two production lines make 2,000 pairs of shoes every day for global brands, including Guess and Tommy Hilfiger.

There are perks - the factory has its own canteen and tennis courts, the workers receive training and are supplied with their own uniforms. However, sometimes workers receive a wage which can be lower than what a worker in an indigenous factory might receive.

China has also been gearing up to take part in resource extraction on the continent, investing heavily in oil wells in Sudan and South Sudan.

That leaves many countries suddenly exposed to a slowdown. New analysis from the Overseas Development Institute suggests that three in particular (Ethiopia, Senegal and Tanzania) would suffer from being exposed not only to a Chinese or Indian slowdown, but also from slowdown in the EU and energy price shocks.

ODI research fellow Isabella Massa said:

Generally speaking most countries we looked at are doing fairly well in quite a volatile environment but the most vulnerable African countries are especially exposed to the growth slowdown in China and India.

The evidence points to significant downside risks for the global economy in 2013, which is why it is vital that countries take a close look at how they can raise their own productivity and target sustained growth at the kind of rates we continue to see across much of Africa.

If China does pass on its growth shocks to those nations, will it follow Europe down the road from imperialism to charity? How much responsibility does the Chinese government feel to the countries it is now operating in?

South Sudan President Salva Kid shakes hands with Chinese Vice Premier Li Keqiang. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty Images
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David Cameron’s starter homes: poor policy, but good politics

David Cameron's electoral coalition of buy-to-let retirees and dual-earner couples remains intact: for now.

The only working age demographic to do better under the Coalition was dual-earner couples – without children. They were the main beneficiaries of the threshold raise – which may “take the poorest out of tax” in theory but in practice hands a sizeable tax cut to peope earning above average. They will reap the fruits of the government’s Help to Buy ISAs. And, not having children, they were insulated from cuts to child tax credits, reductions in public services, and the rising cost of childcare. (Childcare costs now mean a couple on average income, working full-time, find that the extra earnings from both remaining in work are wiped out by the costs of care)

And they were a vital part of the Conservatives’ electoral coalition. Voters who lived in new housing estates on the edges of seats like Amber Valley and throughout the Midlands overwhelmingly backed the Conservatives.

That’s the political backdrop to David Cameron’s announcement later today to change planning to unlock new housing units – what the government dubs “Starter Homes”. The government will redefine “affordable housing”  to up to £250,000 outside of London and £450,000 and under within it, while reducing the ability of councils to insist on certain types of buildings. He’ll describe it as part of the drive to make the next ten years “the turnaround decade”: years in which people will feel more in control of their lives, more affluent, and more successful.

The end result: a proliferation of one and two bedroom flats and homes, available to the highly-paid: and to that vital component of Cameron’s coalition: the dual-earner, childless couple, particularly in the Midlands, where the housing market is not yet in a state of crisis. (And it's not bad for that other pillar of the Conservative majority: well-heeled pensioners using buy-to-let as a pension plan.)

The policy may well be junk-rated but the politics has a triple A rating: along with affluent retirees, if the Conservatives can keep those dual-earner couples in the Tory column, they will remain in office for the forseeable future.

Just one problem, really: what happens if they decide they want room for kids? Cameron’s “turnaround decade” might end up in entirely the wrong sort of turnaround for Conservative prospects.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.