China to Become Africa’s Biggest Export Market in 2012

Africa has a trade surplus with China

Already Africa’s single biggest trading partner, China is set to become the continent’s largest export destination in 2012 according to South African based Standard Bank.

The milestone would mark a significant turnaround since 2008, the bank says, when exports to China stood at half of those to the US.

In a research note, Standard Bank’s Beijing based economist Jeremy Stevens writes that “despite becoming marginally more expensive, China has managed to grow exports to Africa rapidly.”

The estimate is the latest sign of deepening ties between the two regions, and Mr Stevens goes on to say that “Chinese and African businesses are now more comfortable transacting with one another. Looking forward, China is well-positioned to participate in Africa’s next phase of development.”

China has been at the forefront of reshaping the continents external relations in recent years, and Mr Stevens notes that its “foresighted engagement with Africa back at the start of the past decade was a master stroke, allowing Beijing to steal a march on Africa’s other partnerships.”

Bilateral trade volumes now exceed $160bn per year, or almost a fifth of the continent’s overall trade – a 28 percent increase from 2011. Imports from China stood at $73bn in 2011, up more than 23 percent on 2010, while Africa’s importance to overall Chinese trade is also increasing. The region now accounts for 3.8 percent of exports, up from 2 percent in 2002. The rapid growth in trade between the two regions is putting pressure on more established partners such as the EU and the US to strengthen their commercial ties with Africa.

Rapidly growing economic activity has gone hand in hand with political engagement. High profile visits by Chinese officials have become common place in Africa since 2000, including President Hu Jintao and Chinese Premier Wen Jiabao.

China has also begun making its mark as an emerging donor. In January a new $200m African Union headquarters was commissioned in Addis Ababa, Ethiopia. Funded entirely by China, the opening ceremony was attended by Jia Qinling, the country’s most senior political adviser, who told those in attendance that “the towering complex speaks volumes about our friendship to the African people, and testifies to our strong resolve to support African development.”

The relationship has however not been without controversy, and China regularly finds itself the subject of allegations that it undermines human rights and governance in its dealings with African governments.

China’s focus on securing access to natural resources has also been the source of debate, with critics arguing that its interests do not represent a long term strategy and differ little from exploitative relationships that have done little to support development on the continent in the past. Fuels, ores and metals account for almost 90 percent of all Chinese imports from Africa.

In some resource exporting countries, notably Zambia, China’s role has become a contentious issue in recent years. Having invested heavily in Zambia’s copper industry relations have been strained amid allegations of mistreatment of Zambian workers by Chinese foremen; tension that has resulted in several deaths in recent years.

Despite such cases, China’s role in Africa is likely to deepen significantly in the coming years. It is estimated that more than one million Chinese citizens now live on the continent, and a change of leadership in China later this year is not expected to result in a change of policy.

Standard Bank’s Mr Stevens argues that “China’s commodity demand is structural and will be longstanding. In addition, Africa’s demand for infrastructure and China’s differential approach to financing creates markets for Chinese exports; commercial opportunities for its [state owned enterprises] and employment opportunities for Chinese people.