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China grows trade with Africa as Europe loses out

Mombasa-port

Storing containers at Mombasa port: Africa-China trade represents more than 10 per cent of the continent’s trade. Photo/FILE

African trade with China is growing at the expense of that with other major global markets which is either declining or stagnating, says the African Development Bank (AfDB) in a new report released on Monday.

Oil and minerals dominate Africa’s exports to China, the report says.

Africa-China trade represents more than 10 per cent of the continent’s trade.

In value terms, it represents $114 billion — $52 billion in exports and $62 billion in imports.

Africa has a trade deficit with China of about $10 billion, according to the report titled Chinese Trade and Investment Activities in Africa.

The report says Europe remains Africa’s largest export market, but its share has slumped from more than 50 per cent in the early 1990s to just over 30 percent now.

In addition, China is aggressively investing in Africa’s infrastructure.

Chinese investments have increased yearly by an average of 46 per cent over the last decade, mainly targeted at water, transport, electricity and information and communication technologies.

The report says the increase in trade stems from China’s global economic strategy shaped by its political objectives and its demand for energy, minerals and other resources.

African exports to China almost doubled in the last decade, from five per cent in 2000 of total exports to 10 per cent in 2007.

trade

This increase has been the most significant among the major trade blocs that Africa trades with – Europe, Asia (excluding China), the United States and Japan.

Some 70 per cent of Chinese imports originate from four African countries: Angola 34 per cent, South Africa 20 per cent, Sudan 11 per cent, and the Republic of Congo eight per cent.

The high concentration of China-Africa trade manifests itself not just by country, but also by sector.

Approximately 70 per cent of African exports to China consist of crude oil, in particular from Angola and Sudan, and 15 per cent of raw materials.

Agricultural products from other African countries have only a modest share.

“The strong demand from China has been a boom for Africa’s exporters,” says Léonce Ndikumana, the Director of Research at the AfDB, “but it also led to a further concentration in the export basket of countries on the continent and, hence, exposes them to volatility in world commodity markets.”

Chinese exports are destined for relatively few countries.

Some 60 per cent go to six countries: South Africa 21 per cent, Egypt 12 per cent, Nigeria 10 per cent, Algeria seven per cent, Morocco six per cent, and Benin five per cent.

Transport equipment

Of China exports to Africa, machinery and transport equipment account for 38 per cent, manufactured goods 30 per cent, and handicraft 22 per cent.

Chemicals and food products account for less than 10 per cent of the total.

Machinery and transport equipment imports are linked to the strong presence of Chinese firms in the infrastructure sector, specifically in telecommunications, construction of roads and public buildings.

“In general, Chinese export products are well suited to African demand,” said Mthuli Ncube, AfDB’s chief economist.