China's Trade With Africa Is up, but That's Not Necessarily a Good Thing

Representatives from 53 African countries are expected to attend the inaugural China-Africa Economic and Trade Expo that will take place in Changsha, capital of the south-central province of Hunan, from June 27-29. 

Those African officials attending the expo will no doubt have one over-riding objective: sell more stuff to China.

At first glance, China-Africa trade looks healthy. Trade between the two regions rebounded sharply in 2018 to more than $204 billion, reversing a multiyear slump and reaffirming China's role as the continent's most important trading partner.

But those big numbers also conceal serious problems. The Chinese sell far more than they buy from Africa, fueling yawning trade deficits that are potentially unsustainable. In fact, 40 countries across the continent currently have trade deficits with China.

China's trade is also not spread evenly geographically or across various industries. An estimated 70 percent of everything that China imports from Africa is either minerals, timber or oil, the bulk of which comes from just ten countries.

"Even as Sino-African bilateral exchanges  have increased in the past decade and a half, imbalances continue to persist with African countries importing enormous quantities of consumer and light-manufactured goods as well as machinery and electronics. China, in turn, mostly buys minerals and metals from Africa since it doesn’t have enough natural resources of its own to meet its expanding industrial needs." -- Quartz Reporter Abdi Latif Dahir

The situation in Kenya highlights the disparity that is common in most resource-poor African countries where, according to the government's National Bureau of Statistics, Kenya exported just $167 million to China last year but imported a staggering $3.78 billion worth of goods, mostly equipment used to build infrastructure like the Standard Gauge Railway.

China, for its part, does acknowledge the problem and events like the one that will take place in Changsha are purportedly intended to facilitate more African imports to the Chinese market in the hopes of minimizing the current trade imbalance.

But experts say it won't be easy.

Hannah Ryder, CEO of the Beijing-based consultancy Development Reimagined, advises stakeholders from both Africa and China on trade-related issues. While she acknowledges the current trade relationship has its problems, she also thinks there are new opportunities for African exporters that can potentially help narrow the divide.

Hannah joins Eric and Cobus to discuss the current state of China-Africa trade and what can be done to make it more equitable and sustainable for both sides.

JOIN THE DISCUSSION:

What do you think of the current China-Africa trading relationship? Are you concerned about the trade deficits that China runs with most African countries or do you think this will eventually resolve itself as African countries industrialize and move up the production value chain? Let us know.

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