A Global Economy: China-Africa Bilateral Trade
China-Africa’s complex relationship
Chinese domestic growth begin to steadily increase within the last 16 years. China had a demand for natural resources and job creation. Africa was an attractive partner due to its abundance of commodities and need for infrastructure development. However, weak commodity prices weekened the value of African exports to China, while Chinese exports stayed strong to Africa.
- The value of China-Africa trade in 2016 was only $128 bn, down from a high of $215 bn in 2014.
- In 2016, the largest exporter to China from Africa was Angola, followed by South Africa and The Republic of Congo.
- In 2016, South Africa was the largest buyer of Chinese goods, followed by Egypt and Nigeria.
China finances more than 3,000 infrastructure projects
China has contributed a large amount of financing to Africa, which accounts for 14% of Sub-Saharan Africa’s total debt stock. For example, Kenya has received four times the volume of Chinese loans to the government. This is six times more than France which is the country’s second largest creditor. It is expected that the FOCAC will be held in Bejing and likely continue this trend of commerical loans for infrastructure projectcs.
Public policy concern
China’s commercial loan and debt that has been incurred by Africa’s government has imposed a major public policy concern. It has been suggested that China should lean towards a blended financing model based on Western and Chinese sources of financing. Africa should consider and will benefit from China converting to a more actively open tender to international compeition rathern than commerical loans. Africa will benefit from a larger portion of grants, instead of relying soley on commerical loans.China will continue to have a major infulence and presence in Africa, due to a growing interest in the infrastructure which can contribute to a un-warrented debt burden.
Written by: Kimberly A. Carter