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IV. A. Private Traders: THE ROLE OF THE PRIVATE SECTOR

Written by: International Monetary Fund

Article Overview: Mirroring its contributions to domestic economic activity, China’s private sector is in the forefront of the country’s external trade and investment expansion. However, its role in China-Africa economic relations has been much less appreciated, in part because there are no reliable data. Understanding China’s private enterprises (including those that are joint ventures and collectively owned) and their activities in Africa is important for assessing the evolution of trade and capital flows between China and Africa.

IV. A. Private Traders: THE ROLE OF THE PRIVATE SECTOR

Mirroring its contributions to domestic economic activity, China’s private sector is in the
forefront of the country’s external trade and investment expansion. However, its role in
China-Africa economic relations has been much less appreciated, in part because there are no
reliable data. Understanding China’s private enterprises (including those that are joint
ventures and collectively owned) and their activities in Africa is important for assessing the
evolution of trade and capital flows between China and Africa.
A. Private Traders
Before 1985 state-owned trading companies had exclusive rights to export, import, and
foreign exchange, and sector-dictated mandates were strict. With these restrictions since
relaxed, China’s foreign trade landscape has changed completely. State trading companies
have faded away; trade has become decentralized, and private and joint venture firms are
now the dominant forces in export and import.
In recent years individual small entrepreneurs, often traders, have been traveling or migrating
to Africa to seek business opportunities. Once established in African towns, these
entrepreneurs set up wholesale or retail outlets and import from China consumer goods like
electronic appliances, textiles, and clothing, competing with local traders (ECOWAS–
SWAC/OECD, 2006). Many of these companies have teamed up with local businesses.
These companies, which have an intimate knowledge of the African market and local
networks, may become more important in China-Africa trade as African incomes rise.

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

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Article Tags: africa trade, capital flows, consumer goods, dominant forces, economic activity, economic relations, electronic appliances, imf, incomes, intimate knowledge, joint ventures, local networks, local traders, mandates, private enterprises, private traders, retail outlets, swac, understanding china, venture firms



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