While China is now one of Africa's most important trading partners, the reverse is not true. Africa represents less than 5% of China's global trade balance, most of it in commodities that can be sourced elsewhere. Africa barely registers in terms of the value of its trade compared to China's major trading partners in Europe, the US and the Middle East.
Because China is now so economically important to Africa, many people believe the reverse must also be true. It's not. Not a single African country is on the list of China’s top 10 trading partners. While Africa is no doubt important to China for a number of different reasons, trade is not the dominant one. Africa-China scholar Daouda Cissé, an independent researcher based in Montreal, places the continent's trading relationship with China in the proper context.
For two decades or so, the relationship between African countries and China has grown, and cooperation has been increasing in various areas, including media, culture and education. While China is Africa’s largest trading partner, Africa is not China’s main trading partner.
In fact, Africa lags far behind the European Union (EU), the US and the Association of Southeast Asian Nations (ASEAN) countries, which are China’s largest trading partners. China’s status as Africa’s largest trading partner depends largely on the volume of China’s exports to Africa. When one looks at African exports alone, Africa’s largest trading partners are the EU and the US. However, Africa-Asia trade (particularly fuelled by China) is growing and Africa’s imports from Europe are declining while its imports from Asia are increasing. This piece contributes to debunking the myth that Africa is China’s largest trading partner, often relayed in academia, the media, policy environments, etc., and explores to what extent the Forum on China-Africa Cooperation (FOCAC) could enhance Africa-China trade.
FOCAC serves as a dialogue platform between African and Chinese officials to deepen economic, political and diplomatic cooperation between China and African countries. Areas of cooperation include trade, investments, education, development assistance, tourism, etc. While several meetings and fora are organized to foster and deepen partnerships between African countries and China, economic negotiations represent the major agenda of the FOCAC meetings. Trade, investments and aid are at the heart of the meetings between African and Chinese officials. China’s interest in enhancing its Outward Foreign Direct Investment (OFDI) and foreign trade meets Africa’s willingness to ‘look east’ and to diversify its global partnerships.
China concentrates on investing and selling abroad in order to promote its economic development through investments and trade, not least with African countries. Besides growing investments in other sectors (telecommunications, manufacturing, media, insurance, among others), China mainly invests in resource-rich African countries through infrastructure projects (pipelines, refineries, smelters and so on). These investments enable those countries to enhance resource exploration, exploitation and production. But such investments also contribute to securing China’s energy needs. As for trade, China’s production surplus over the years, fuelled by labour and capital intensive industries, requires the exploration of overseas markets. Africa’s lack of manufacturing industries and need for finished products coincides with China’s market-seeking motivation to enable its companies to sell products made in China to African countries. According to China’s General Administration of Customs data on merchandise trade published on 21 August 2015, China’s total merchandise trade volume with Africa from January to July 2015 amounts to US$101.37 billion, comprised of US$61.69 billion in exports to Africa and US$ 39.67 billion in imports from Africa. While exports contribute to growth, Africa’s exports, strongly based on resources, have not enabled sustainable development across the continent.
FOCAC: Changing Africa-China trade patterns?
China’s trade and investments with African countries strongly shape Africa-China relations. Yet, Africa’s investments and trade with China raise questions about Africa’s economic interests in China. Africa’s trade remains based on the export of resources, (and some agricultural products). Meanwhile, African countries import manufactured goods. In the growing Africa-China relationship, few African countries (Nigeria, South Africa, Mauritius and Seychelles) have explored the economic potential that China offers in terms of setting up businesses as well as diversifying their exports and export destinations. While the world’s largest companies and small and medium sized enterprises have set up businesses in China, despite its challenges as a business environment, very few African companies have tapped into China. That said, there are a number of African entrepreneurs who have established businesses in China, but these mostly engage in exporting Chinese manufactured products to Africa. Very few of these entrepreneurs diversify their businesses by importing African products into the Chinese market.
Business forums are organized on the margins of the FOCAC official meetings, in order to foster business ties between Chinese and African companies. But very often, when agreements are signed for joint ventures, they serve the interests of Chinese companies and entrepreneurs who bring in more capital to set up businesses in Africa. The opposite – where African businesses expand into Chinese markets – is much rarer, despite the massive opportunities offered by the Chinese markets.