China’s push to promote imports from Africa has yet to boost trade numbers, with shipments from the continent falling 12.4 per cent to US$53 billion in the first half of this year, according to data from China’s General Administration of Customs.
Meanwhile, Chinese exports to Africa rose by 15.4 per cent to US$87.88 billion in the same period, bouyed by increased demand for goods from China after three years of Covid-19 restrictions. Total two-way trade between China and Africa grew by 3.1 per cent in the six months to US$140.9 billion.
Observers said the numbers were affected in part by a subdued economic recovery in China, which has been exacerbated by a slowdown in the property market, as well as lower commodity prices, especially international crude oil.
In the first half of the year, China imported fewer goods from Africa, especially from resource-rich nations such as Angola, the Democratic Republic of the Congo (DRC), the Republic of the Congo, Zambia, Nigeria and Ghana, which are major sources of industrial raw materials and crude oil.
For example, Angola, the continent’s second-biggest oil producer, ships most of its crude oil to China – some of it for the repayment of Chinese loans. But its trade with China in the first six months dropped by 29.8 per cent to US$10.24 billion, with shipments to China dropping by 39.3 per cent to US$7.94 billion in the period.
The fall came despite deals with dozens of African countries to allow tariff-free access to the Chinese market and Beijing’s promise to import more goods from the continent. In 2021, Chinese President Xi Jinping said Beijing aimed to import African products worth US$300 billion by 2025, with an emphasis on non-resource exports.
“China’s weak property sector is hitting Africa hard,” said Charlie Robertson, head of macro strategy at FIM Partners, an asset management firm.
African raw materials had propped up China’s construction and infrastructure boom – from iron ore in the housing sector to fuel for cars – but demand has faded. China’s property investment dropped by 7.9 per cent in the first six months of the year compared to a year earlier, according to official Chinese data.
“With Chinese demand weaker and prices lower, especially for oil [compared to] 2022, the African commodity boom to China has faded,” Robertson said.
“Chinese recovery from zero-Covid policy is slower than expected,” said Carlos Lopes, a professor at the University of Cape Town’s Nelson Mandela School of Public Governance and a former executive secretary of the UN Economic Commission for Africa.
He said that in the second quarter, the Chinese economy was still feeling the effects of the property market crisis, which had an impact on demand for African commodities.
Lopes said Angola, Algeria and other commodity-driven economies as well as Kenya, Ethiopia and Sudan – traditionally strong trading partners of China – were having difficulties in terms of balance of payments and, in the case of Sudan, the additional impact of the war.
South Africa had a brighter trade outlook than most of the continent. The country’s trade with China remained relatively strong during the first six months, increasing 11.7 per cent to US$28.25 billion.
Robertson said South Africa had done better than most African countries with continued sales of metals to China.
“China’s relationship with South Africa is more diversified than most of China’s relations with other African countries, reflecting areas of maturity in South Africa’s economy,” said Lauren Johnston, a China-Africa researcher at the South African Institute of International Affairs in Johannesburg.
She noted that Industrial and Commercial Bank of China had a 20 per cent stake in Standard Bank Group, a major financial services provider in South Africa, which could help ease trade between the countries as there were fewer finance-related barriers.
Johnston added that South Africa’s main exports to China were gold, silver and iron ore, and China had been stockpiling gold, while South African iron ore imports helped China reduce its dependence on Australia.
She said agricultural goods from Africa were likely to be a growth area to help China diversify its food sources and achieve food security. According to Johnston, China’s customs authorities recently appointed some plant health certification experts to work with a few African countries, including Madagascar, Zimbabwe, the Central African Republic and Ethiopia, to accelerate the alignment of standards.
Agricultural products account for only about 5 per cent of African imports to China, but Beijing has signed deals with many African countries to import more farm produce from the continent, including avocados, cashews, sesame seeds, fruit and chilli peppers.
The volume of agricultural trade between China and Africa increased from 33.3 billion yuan in 2012 to 58.6 billion yuan in 2022. In the first five months of this year, the agricultural trade volume jumped 20.4 per cent year on year to reach 26.6 billion yuan.
Source : South China Morning Post