Overview on the China-Africa Trade Relationship

Abstract

This paper investigates the China-Africa trade relationship which deepened since the year 2000 and became very productive in recent years. The paper scrutinizes the terms of trade, the investments made by China, and also the loans that African countries benefited from China. The analysis of the available data revealed that China has become an essential trade partner for Africa and between 2007 and 2017 mostly exported consumer goods, intermediate goods and also capital goods to Africa and imported raw materials and natural resources form African countries, with a favorable trade balance to China. From the year 2011 to 2017, South Africa appeared as the biggest trade partner of China in Africa, for the fact that it is the largest African exporter to China, followed by Angola, Congo, DR Congo, and Zambia, and also the largest importer of Chinese products, followed by Nigeria, Egypt, and Algeria. The paper also indicates that 15 African countries account for 80% of the Chinese FDI flow, led by South Africa with 19.04% of the total FDI over the period 2003-2017. Nigeria has the second position with 7.74%, followed by Zambia (7.55%), DRC (6.65%), Algeria (6.4%) and Sudan (5.28%). In addition, 15 African countries totalize 83% of the Chinese loans, with Angola in the first position with 29.89% of the total amount of loans given by China between the years 2000 and 2017. Ethiopia follows with 9.58%, then Kenya (6.84%) and Congo (5.18). The study recommends the diversification of export partners for some African countries that highly rely on exporting to China, encourages intra African trade as a diversification solution, and calls for more intra industry trade between China and African countries.