Paris, France | AFP | Sub-Saharan Africa nations are growing more dependent on China as an export market, putting them at greater risk to shifts in the Chinese economy, a study published Tuesday said.
“There is no doubt about a strong dependence on China for countries that produce oil and minerals,” said Ruben Nizard, an economist and Sub-Saharan Africa specialist at the French financial services firm Coface.
Nizard is one of the authors of a study into the trade relations between China and African nations in recent years, a period when the Chinese economy’s need for raw materials has driven it to take a greater interest in the continent.
But the Chinese economy’s rebalancing towards services sparked a plunge in commodity prices in 2014 that demonstrated the risk of relying too heavily on China.
African exports dropped by half from 2014, when they hit a record $111.7 billion (97 billion euros), as the price of oil plummeted.
That pushed the region into a trade deficit with China, and the Coface report said “there remains a lot of work to be done for this relationship to become a win-win cooperation”.
Nizard said oil exporting nations were the most vulnerable. Two oil exporting countries, South Sudan followed by Angola, topped Coface’s ranking of African nations dependent on China as an export market.
Countries which export minerals such as Congo and Eritrea, were also in the top five, as was Gambia which exports wood.
The dependence on China is not a reason for pessimism as there are options that nations have.
“Capturing a portion of the value added to the raw materials is an interesting option which could allow for rapid development in Africa,” he said.