The World Bank and Beijing are in discussions about setting up low-cost factories in new industrial zones in Africa to help the continent develop a manufacturing base and reverse its declining share in global trade, the Financial Times reported. It is not clear how this kind of development would impact on the diamond cutting and polishing industry.



Robert Zoellick, the president of the World Bank, said Beijing had shown “strong interest” in proposals to set up manufacturing bases to help African countries achieve high growth paths similar to Asian ones, the report said.



“There is not only willingness but strong interest among some in China and I’ve discussed with the minister of commerce, Chen Deming, that there may be possibilities of moving some of the lower-value manufacturing facilities to sub-Saharan Africa – toys or footwear,” Mr Zoellick told the Financial Times.



Chinese officials and academics have been debating in recent months proposals to use the country’s vast foreign exchange reserves to try to stimulate demand in developing countries – ideas sometimes referred to as “China’s Marshall Plan.”



Last month, Wen Jiabao, China’s premier, pledged $10 billion in low-cost loans over the next three years, an end to tariffs on 60% of exports from the poorest nations and debt forgiveness for several countries, said the report.



Beijing’s loans to governments that come free of western-style political conditions have attracted criticism for propping up unpopular regimes. Some African leaders fear Chinese competition in areas such as shoes and textiles is undercutting Africa’s weak industrial base. Chinese officials are also worried that their relationship with Africa could be seen as a new form of colonialism, the report said.

Mr Zoellick said African countries needed to put in place infrastructure – such as power, transport and efficient customs regimes – to attract the transformative Chinese investment, the FT report said.



“Some of these Chinese industries have the benefit of knowing how to do more labor intensive manufacturing and they have the marketing networks and this is always a challenge when you start an operation,” the former US Trade Representative and deputy Secretary of State said.



But any plan to shift production to Africa that goes beyond the symbolic is likely to meet resistance. Beijing has opposed growing international pressure to appreciate its currency partly because of fears of job losses in export industries.



Provincial governments in the interior of China are also desperate to attract jobs to their areas as labor costs in the coastal regions increase.



Moreover, the prime motivation of the Chinese Marshall Plan has been to find ways to create new sources of demand for Chinese factories, not to shift their output elsewhere.