Do Chinese Exports Crowd-out African Goods? An Econometric Analysis by Country and Sector

Abstract

Trade is one of the key channels through which Chinese economic growth affects the world economy and especially developing countries. African manufacturing sector is confined to few traditional sectors. Even if at times, and in some sectors, African exports have been favored by preferential treatments, Africa has proven to be particularly vulnerable to the competitive threat posed by China in third markets, including other African countries. With the intensification of economic relations, in fact, China has started flooding African markets with its low-cost manufactures, often at the expense of local producers. Furthermore, in Africa’s main trade partners, namely United States and European Union, most Chinese goods are likely to crowd-out cheap African manufactures. We measure the indirect impact of China on African exports. Using disaggregated data for the period 1995–2005, we present significant evidence on the existence of a displacement effect at different levels: sector, product, region and market.