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II.a Merchandise Trade: TRADE AND CAPITAL FLOWS BETWEEN CHINA AND AFRICA

Guest post by: International Monetary Fund

Article Overview: This section pulls together the information available and attempts to quantify, to the extent possible, China’s economic engagement with Africa.3 Emerging from the review is a recognition of China’s multifaceted influence: as market for Africa’s exports, donor, financer and investor, and contactor and builder. While official financial and technical assistance predominated in the past, commercial activities, which have increased rapidly in the last few years, are now dominant in financial terms.

II.a Merchandise Trade: TRADE AND CAPITAL FLOWS BETWEEN CHINA AND AFRICA

This section pulls together the information available and attempts to quantify, to the extent
possible, China’s economic engagement with Africa.3 Emerging from the review is a
recognition of China’s multifaceted influence: as market for Africa’s exports, donor,
financer and investor, and contactor and builder. While official financial and technical
assistance predominated in the past, commercial activities, which have increased rapidly in
the last few years, are now dominant in financial terms.
A. Merchandise Trade
Trade between Africa and China began to accelerate in about 2000. Between 2001 and 2006,
Africa’s exports to China increased at an annual rate of over 40 percent, rising from US$4.8
billion to reach US$28.8 billion in 2006 (Figure 1 and Table 1). During the same period,
Africa’s imports from China quadrupled to US$26.7 billion. In 2006 Sub-Saharan Africa
(SSA) accounted for the bulk of the Africa-China trade; the region’s exports to China
amounted to US$25 billion, about 85 percent of all African exports to China that year.
According to statistics compiled by China, for 2004–06 Africa ran a small trade surplus,
about US$2 billion each year.
The terms of trade have moved in Africa’s favor, reflecting both the composition of trade and
rising prices for Africa’s main export commodities (Figures 2 and 3). In 2006 oil and gas
accounted for 62 percent of Africa’s exports to China, followed by nonpetroleum minerals
and metals (13 percent). 4 Africa’s imports from China comprised mainly manufactured
products (45 percent) and machinery and transport equipment (31 percent). Rough estimates
suggest that Africa’s terms of trade in relation to China improved by 80 to 90 percent
between 2001and 2006, primarily because robust world demand, lifted in part by China,
drove up international prices for oil and minerals.

Africa-China trade, although growing fast, is relatively small in the global context: China
accounted for 16 percent of total African exports (19 percent of exports from SSA) in 2006, a
share well below that of the E.U. and the U.S.A.6 Although the E.U. and the U.S.A. continue
to make major contributions to Africa’s export growth, China is catching up fast. China’s
imports from and exports to Africa are still smaller than its trade with the Middle East and
developing countries in the Western Hemisphere (Figure 4), but it has set a goal of doubling
two-way trade with Africa to US$100 billion by 2010. China is thus likely to take an
increasingly larger share in Africa’s external trade.

IMF Working Paper
African Department
What Drives China’s Growing Role in Africa?
Prepared by Jian-Ye Wang
October 2007

Related Articles
  V. A. Markets for Exports: AID VS. COMMERCE: FACTORS INFLUENCING THE GROWING TIES
  What Drives China’s Growing Role in Africa?
  IV. A. Private Traders: THE ROLE OF THE PRIVATE SECTOR
  CONCLUSION: What Drives China’s Growing Role in Africa?
  II.D. Foreign Direct Investment: TRADE AND CAPITAL FLOWS BETWEEN CHINA AND AFRICA

Article Tags: african exports, china trade, composition, contactor, economic engagement, export commodities, extent, figure 1, global context, merchandise trade, metals, minerals, oil and gas, robust world, rough estimates, ssa, sub saharan africa, technical assistance, trade surplus, transport equipment



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