• Africa’s gapping trade imbalance in favour of China is a legacy of the what is widely believed to be Africa’s lost decades.
• Africa was mired in conflict and saddled with debt. This period was also characterised by erosion of vital capitals; human and physical.
Image: PSCU
The first China-Africa Economic and Trade Expo will be held on June 27-29 in China’s Hunan Province and a total of 53 African countries will participate and lots of deals will be signed.
By 2011, China became the largest individual trading partner for the region, with the share of SSA trade with China reaching an estimated 16 per cent, rising from negligible shares in the 1990s. Today China has become Africa’s foremost development and trade partner. The scale and volume of trade between Africa and China has grown exponentially from just US$10 billion in 2000 to $204.2 billion in 2018.
Expansion of trade links with China has allowed African countries to diversify their export base, away from the advanced economies of the West. However, trade imbalance persists in the Sino-Africa bilateral relationship.
Africa mostly exports unprocessed raw materials such as crude oil, iron, zinc, cobalt, titanium, zinc, copper, cobalt and tobacco for China’s industrial and manufacturing needs. Africa in turn imports machinery and electronics, and consumer goods.
Africa’s gapping trade imbalance in favour of China is a legacy of the what is widely believed to be Africa’s lost decades; the period between 1980 and 1990. During this decade Africa was mired in conflict and saddled with debt. This period was also characterised by erosion of vital capitals; human and physical, especially roads, railways and energy. Moreover, foreign direct investments declined to a trickle. Consequently, industrial output collapsed.
We owe it to ourselves to leverage the fourth industrial revolution, harness the abundance of a youthful workforce, and take advantage of China’s determination to re-balance its economy and reduce reliance on exports.
The China-Africa Economic and Trade Expo could not be timelier. First, the Africa Continental Free Trade Agreement (AfCFTA), which establishes the largest free trade area in the World will increase the capacity for intra-African trade and provide the impetus for investments to boost industrial output. If successful, AfCFTA could boost intra-African trade by up to 52 per cent in the next three years, up from the current 15 per cent.
Second, the Belt Road Initiative proposed by China in 2013 is an ambitious infrastructure project designed to build a trade and infrastructure network, which will expand trade links among African countries and with China and the rest of the world.
Third, as China grapples to re-balance its economy to reduce reliance on exports and amidst trade tensions with the United States of America, Africa could be the next global manufacturing hub. But becoming the next global manufacturing hub is neither inevitable nor owed to Africa. It must be earned.
The Expo presents what will be one of many opportunities for Africa to deepen Sino-Africa bilateral trade relations. A deeper relationship with China must be about enhancing Africa’s capacity in science, innovation and technology.
We owe it to ourselves to leverage the fourth industrial revolution, harness the abundance of a youthful workforce, and take advantage of China’s determination to re-balance its economy and reduce reliance on exports.
The Economic and Trade Expo is Africa’s chance to launch firmly on the first rung of the ladder up the path of industrialisation. Let’s go to Hunan to learn from, partner with and trade with China.