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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