Africa countries should showcase and position own industrialisation roadmap to China and seek support to address the China-Africa trade imbalances—DCG Chief Economist

* Guided by latest annual international trade data of 2023, the picture is that African countries face challenges of trade imbalances which favours China

* In short, there are more imports from China into African countries than what African countries are exporting to China in value terms

* In 2023, China’s total trade with Africa expanded moderately by 1.5% to reaching US$282.1 billion, based on General Administration of Customs data

By Duncan Mlanjira

South Africa’s Don Consultancy Group (DCG) Chief Economist, Chifipa Mhango contends that African countries should showcase and position its own industrialization roadmap to China and seek support to address the China-Africa trade imbalances.

Mhango expressed these views as delegations from several African countries led mostly by their Presidents — including Malawi’s Head of State, Lazarus Chakwera — have gathered in Beijing-China for a three-day China-Africa summit, in which China is asserting itself as a leading partner for the continent’s development agenda, as it faces resistance from the West.

“If one is guided by latest annual international trade data of 2023, the picture is that African countries face challenges of trade imbalances which favours China,” says the Chief Economist in a public statement.

“In short, there are more imports from China into African countries than what African countries are exporting to China in value terms. In 2023, China’s total trade with Africa expanded moderately by 1.5% to reaching US$282.1 billion, based on General Administration of Customs data.

“However, Chinese total exports to Africa increased by 7.5% to reaching US$173 billion, while its imports decreased by 6.7% to US$109 billion in the year 2023, with commodity price fluctuations also contributing to this decline.

“Of concern”, Mhango continues, “is the increasing Africa’s trade deficit with China, escalating to US$64 billion from a low of US$46.9 billion in 2022.”

He further indicated that an analysis of at least four of the top regional economies on the African continent in 2023, based on data from United Nations COMTRADE database on international trade, shows that South Africa is the top Chinese exports destination at US$21.9 billion, followed by Egypt US$12.94 billion, Nigeria (US$11.95 billion) and then Kenya (US$3.28 billion).

“While when it comes to African exports to China, South Africa was at US$12.48 billion, Nigeria (US$1.61 billion), Egypt (US$909.11 million), and Kenya (US$206.63 million) — a clear reflection of a trade imbalances with all these top four African economies with China.

“For countries such as Malawi, Chinese imports into Malawi stood at US$546.1 million and Malawi exports to China at only US$54.4 million in 2023.

“Although China has positioned itself and asserting to its role as a leading partner in terms of African economic development agenda, there is this growing concern around its international trade dominance on the African continent, which African leaders and their delegations should present with one voice.”

Quoting latest annual international trade data of 2023 from United Nations COMTRADE database, Mhango also observed that this “portrays that the top four regional economies on the African continent such as Egypt, there was more exports in value terms of its products to fellow African countries such as Libya, Sudan than China”.

“Kenya also exported more to Rwanda, Tanzania, South Sudan and Egypt than China, while Nigeria exported more to Cote d’Ivoire and South Africa than China.

“South Africa is the one with more access to the China market among these top African regional economies, despite its own trade imbalances challenges with China.

“There is no doubt also that the economic challenges faced by China of weak business and consumer confidence, tepid demand conditions, property crisis and its own inability to stimulate local economies amid Government debt has also attributed to its low import value from Africa.”

Thus Mhango maintains “it is for this reason that diversification of Africa export destination is imperative. There may be more for Africa in itself, if its leadership moved from words to action-oriented approach in the drive towards trade and industrialization roadmap, with catalytic support from countries such as China on road, railway lines and power plants infrastructure development.”

“The global geo-political factors, CoVID-19 lockdown lessons and changing economic challenges have demonstrated that no market is guaranteed for trade, therefore, Africa must also adapt to the changing trade dynamics and position its own industrialization roadmap to countries such as China to improve its own trade imbalances through export diversification externally and within the African continent through intra-country trade.”

Mhango, therefore, recommends that “collaboration with countries such as China in technological advancement of its industrialisation roadmap, green energy technology, access to capital at reasonable cost, more market access for African products or goods into China, more direct investment of Chinese companies on the African continent into value added production of African mineral wealth and other raw materials is what Africa should aim for at this year’s China-Africa summit”.

Menawhile, President of the People’s Republic of China, Xi Jinping, said Malawi and other African countries stand to profit from China’s financial support in various technical areas with over RMB360 billion yuan (about US$51 billion) in the next three years.

The president made the remarks in his keynote address during the official opening session of the 2024 Summit of the Forum on China-Africa Cooperation (FOCAC) yesterday which President Chakwera is attending.

Xi Jinping said China will work with Africa to implement 10 partnership actions for modernisation to deepen China-Africa cooperation and spearhead the Global South modernisation that will comprise mutual learning among civilizations, trade prosperity,industrial chain cooperation, connectivity, development cooperation, health, agriculture and livelihoods, people-to-people exchanges, green development, and common security.

“To implement the 10 partnership actions, the Chinese government will provide RMB360 billion yuan of financial support through the next three years — which breaks down into RMB210 billion yuan of credit line, RMB80 billion yuan of assistance in various forms, and at least RMB70 billion yuan of investment in Africa by Chinese companies. 

“In addition, China will encourage and support Africa in issuing panda bonds in China to enhance our results-oriented cooperation in all areas,” Xi Jinping said.

On his part, President Chakwera has already expressed interest to leverage on the new strategic relationship with China by getting a slice of developments and support for Malawi that are on offer from China.

Malawi has already bagged a K50 billion financing support for constructing the Judicial Complex in Lilongwe and more positive outcomes are being consolidated through various side bilateral engagements that the president has and continues to hold with various Chinese companies and officials.

 

Xi Jinping further reinforced his commitment to Malawi and Africa in general by saying no country in Africa should be left behind in the joint path to modernisation.

“As an African proverb goes, a friend is someone you share the path with Xi Jinping said. “On the path to modernisation, no one, and no country, should be left behind. Let us rally the more than 2.8 billion Chinese and African people into a powerful force on our shared path toward modernisation, promote modernisation of the Global South with China-Africa modernisation, and write a new magnificent chapter of development in human history.

“Let us join hands to bring about a bright future of peace, security, prosperity and progress for our world”.

Also in attendance at the opening session were chairperson of the African Union (AU), Mohamed Ould Cheikh El Ghazouani; United Nations Secretary General, António Guterres; chairperson of the AU Commission, Moussa Faki Mahamat, and other heads of state and government from various African countries.

FOCAC was founded in 2000 and has been one of the key development drivers for Africa providing tangible development results and outcomes transforming African countries in their pursuit of development for the upliftment of their people.—Reporting from Beijing, China by Chikondi Chimala, MANA