[PODCAST] China appears to be losing interest in Africa

For the past 15 years, the China-Africa story has been one of "win-win development," steadily rising investment and booming trade. Africa represented a new era of possibility for Chinese companies seeking alternative sources of raw materials, untapped markets for finished goods and an attractive destination for hundreds of thousands of PRC migrants. For the most part, everyone seemed very happy. The Chinese were getting what they wanted, while African governments were enthralled to finally have the chance to break centuries of U.S. and European dependence.

The sobering reality is that while China is the largest trading partner for a growing number of African countries, each of those countries really does not mean much economically to China.

The problem is this was always a highly unequal relationship. China, home to the world's largest population and with the planet's second largest economy, was always going to have a massive advantage in its dealings with the comparatively tiny, largely poor developing countries in Africa.

The sobering reality is that while China is the largest trading partner for a growing number of African countries, each of those countries really does not mean much economically to China. In all, African trade represents less than 5% of China's total global trade balance making it something of a rounding error when compared with China's trade volumes with countries in Asia, Europe and North America.

Now, as Beijing ramps up its vast global trading strategy known as "One Belt, One Road," the Chinese have a lot more options on where to invest and trade with other parts of the world.

That may explain why trade volumes with Africa fell sharply in 2016, plummeting over 30% from $220 billion in 2015 to just $149 billion last year. Similarly, Chinese investments on the continent may still be rising but not as fast as they have in recent years, according to Ernst & Young's latest African investment survey. It appears that a growing number of Chinese companies have had enough of the risk and volatility in many African markets, preferring instead to invest in countries with higher levels of political and social stability.

Migration patterns are another indicator that experts like Beijing-based investment attorney Kai Xue look for when analyzing the stability of Sino-African ties. Kai Xue advises a number of major Chinese multinationals on their outbound investment strategies and has been noticing a growing number of Chinese expatriates are packing up and leaving countries like Angola and South Africa among others. According to his estimates, the number of Chinese migrants on the continent has fallen sharply in recent years amid slowing economic growth in Africa and rising anti-Chinese sentiment in many countries. While there are no official statistics on the precise number of Chinese expatriates in Africa, Kai Xue estimates the figure is now well below 1 million.

Kai Xue is among a growing number of Chinese analysts who is increasingly bearish on the outlook for Sino-Africa ties. He joins Eric & Cobus to discuss why he thinks this once promising relationship now faces an uncertain future.

Join the discussion. How will African countries react if China begins to dis-engage, shifting its trade and investment to other parts of the world? Let us know what you think.

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