Two-way trade moves up

The nature of what Africa buys from China is slowly beginning to change

While most of China's imports from Africa continue to be energy products and resources, its exports to the continent are shifting toward high-end products, a trend that will continue, experts say.

"China's imports from Africa last year did not change much," says Li Wentao, a researcher with the Institute of African Studies at the China Institutes of Contemporary International Relations.

"That's because the country's economic development needs the primary products of energy and resources that accounted for about 70 percent of the continent's exports. On the other hand, China's exports to Africa are shifting toward products with higher technology, such as mechanical and electrical products, motorcycles, televisions, cell phones and equipment."

The trend is becoming clearer and is driven mainly by fast economic growth in the continent, he says.

"Africa's consumption has improved significantly in recent years. At the same time, Chinese products have had the advantage of being cheap but of good quality. In recent years some Chinese businesses have moved to establish their brands and standards in Africa."

China's project contracting businesses in Africa have also increased exports of mechanical and electrical products to the continent, he says.

"The growth in trade between China and Africa will continue to be robust. In addition to increasing in size, the quality is also improving as mechanical and electrical products, rather than shoes and clothes, account for a bigger share of Chinese exports to Africa, a remarkable trend in recent years."

Bilateral trade was probably worth more than $200 billion last year, he says.

Between January and October last year, bilateral trade between China and Africa was worth $172.83 billion, up 5.5 percent from a year earlier, says Chen Hao from the Department of West Asian and African Affairs of the Chinese Ministry of Commerce.

High value-added and high-tech products accounted for nearly half of China's exports to Africa, Chen says. African industrial goods such as steel and copper products have also started to go to the Chinese market.

China became Africa's largest trading partner in 2009. Africa is China's important import source, second-largest market of overseas project contracting and fourth-largest outward investment destination, according to a Chinese government white paper on China-Africa economic cooperation published last year.

Trade between China and Africa was worth $198.5 billion in 2012, 19 percent more than in 2011, and accounted for about 5 percent of China's total trade and about 16 percent of Africa's overall trade. More than 2,000 Chinese businesses had invested more than $20 billion in African non-financial sectors by the end of 2012, the white paper says.

Li Jinzao, vice-minister of commerce, says Africa's economic integration has provided new scope for bilateral cooperation in broader sectors and at a higher level. Economic cooperation between China and Africa is going through a period of rapid growth and change, he says.

Li Wentao says: "A highlight is that bilateral trade in services has grown rapidly in recent years. More Chinese tourists are visiting Africa, and African aviation and logistic services are going into China. Chinese telecom giants such as Huawei and ZTE are greatly expanding their businesses in Africa."

However, China and Africa still have the challenge of a trade imbalance, a structural problem that cannot be resolved in the short term, Li says.

"Africa is also looking at China's transfer of technology and industries into the continent. As China shifts some manufacturing businesses, that will ease overcapacity at home and upgrade African industries.

"In addition to expanding bilateral trade, China will next pay more attention to increasing Chinese investment in Africa, which will create more local employment and benefit the continent more."

In March last year, Chinese President Xi Jinping chose Africa as a destination in his maiden foreign trip after assuming office. While in Tanzania, he said China would strengthen mutually beneficial cooperation with African countries in fields such as agriculture and manufacturing and help African countries translate their advantages in resources so they could achieve growth that is internally driven and sustainable.

lijiabao@chinadaily.com.cn

(China Daily Africa Weekly 01/31/2014 page7)