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Trade boom with China makes Africa one of world's strongest performers

·4 min read

Trade between China and Africa reached an all-time high in 2021 of US254 billion - a 35 per cent year-on-year increase surpassing pre-Covid-19 numbers, according to the latest Chinese customs data.

China exported US$148 billion in goods to Africa, up 29.9 per cent on 2020, while receiving US$106 billion in imports from the continent - a rise of 43.7 per cent - in a year of recovery from the devastating effects of the coronavirus pandemic.

Trade dropped 11 per cent year-on-year in 2020 to US$187 billion - after growing 2 per cent to US$208.7 billion the previous year - in the wake of tough pandemic control measures imposed across the world, including border and movement restrictions as well as factory and port closures.

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South Africa took the lion's share of the China trade, with US$54 billion last year, followed by Nigeria at US$26 billion, Angola on US$23 billion, and Egypt with US$19 billion.

The Democratic Republic of Congo (DRC) - where China sources most of its cobalt, an essential component of batteries for electric vehicles, as well as smartphones, tablets and laptops - was in fifth place, at US$14 billion.

Analysts attributed last year's better trade numbers to Beijing's recent push to boost African imports, as well as higher commodity prices which started recovering in late 2020 and continued to improve last year.

"Africa had one of the strongest trade performances versus China of all regions in the world," said Mark Bohlund, a senior credit research analyst at REDD Intelligence.

"The growth in China's imports from Africa and exports to Africa are likely to moderate in 2022 due to weaker growth after the 2021 economic recovery and less support from rising commodity prices.

"The Chinese efforts to boost imports from Africa of agricultural and other goods is likely to take time to deliver substantial results."

Charles Robertson, global chief economist at emerging and frontier markets investment bank Renaissance Capital, said increased medical equipment supplies from China to Africa might also have played a role.

"China's exports also rose, as rising African debt levels allowed imports of investment goods," he said.

China touts digital silk road in Africa

Most Chinese exports to Africa are finished products - from textiles to electronics - while African sales to China are dominated by raw materials and unprocessed products, resulting in a trade surplus in China's favour.

To help balance trade, President Xi Jinping promised in November to grow the value of imports from Africa to US$300 billion in the next three years.

In a speech to the Forum on China-Africa Cooperation (FOCAC), he said China would open "green lanes" for African agricultural exports to China. Further, Beijing would offer US$10 billion in trade finance to support African exports.

A number of African countries have signed recent deals allowing the export of African agricultural products such as chilli peppers, cashew nuts, sesame seeds and spices into China.

Xi plays up roles for private sector in China-Africa trade and finance

Tanzania began exporting soybeans to China in 2020, as Beijing sought to cut its reliance on the US and Brazil. Similar deals have been reached for ­avocados, tea, coffee and roses from Kenya, coffee and soybeans from Ethiopia, beef products from Namibia and Botswana, fruit from South Africa, and coffee from Rwanda.

Moritz Weigel, founding director of the Germany-based firm China ­Africa Advisory, said, that in addition to rising commodity prices, the growth in trade volume between China and African countries was a rebound effect from the disruption of supply chains in 2020.

"African exports to China will continue to increase and diversify in 2022 with agricultural products gaining more importance," he said.

Measures announced at FOCAC - including the US$10 billion in finance for African exports and simplified trade mechanisms - are likely to accelerate this trend, according to Weigel.

What stops Africa from exporting more crops to China?

Lawmakers in the central Chinese province of Hunan have already moved to implement Xi's "green lanes" pledge, with the approval of regulations to boost trade with Africa. A free-trade zone will be established to help grow trading activity between the province and African countries.

Chinese Foreign Minister Wang Yi has signed a deal with Kenya allowing fresh avocado and aquatic products into the Chinese market, which previously would only accept frozen fruit - locking out several traders in the East African country which could not afford freezing facilities.

Zimbabwe and China have also signed a citrus export protocol, which the Chinese ambassador to Harare Guo Shaochun linked to Xi's "green lanes" pledge when announcing the deal.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2022. South China Morning Post Publishers Ltd. All rights reserved.