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Belt & Road Initiative promotes transformation and upgrading of China-Africa trade
September 14, 2018
Abstract : The Belt and Road Initiative is promoting transformation and upgrading of the trade between China and Africa and bringing more benefits to the people of both sides.
BEIJING, Sept. 14 (Xinhua) -- The Belt and Road Initiative is promoting transformation and upgrading of the trade between China and Africa and bringing more benefits to the people of both sides.
China has been Africa's largest trading partner for nine years in a row. In 2017, China's trade with Africa surged 14 percent year on year to 170 billion U.S. dollars. The fast growth continued into the first half of 2018 when the trade volume jumped 16 percent to nearly 100 billion U.S. dollars.
--- Booming China-Africa trade amid structural adjustment
After the establishment of the China-Africa Cooperation Forum in 2000, China-Africa economic and trade cooperation has entered a period of rapid development.
Trade volume has grown rapidly from 10 billion U.S. dollars in 2000 to 170 billion U.S. dollars in 2017. With China becoming the largest trading partner of Africa for the first time in 2009, China-Africa trade has also entered a stage of structural adjustment.
It is worth noting that with the implementation of the Belt and Road Initiative, the building materials and electromechanical products with high added value have gradually become the main goods exported by China to Africa. Earlier, China mainly exported light industry, food, chemical products, and livestock products to Africa.
At the same time, with a series of measures such as tariff reduction and exemption adopted by China, in recent years, Africa's exports to China have grown rapidly. The main African export commodities include agricultural and forestry raw materials, oil and related products, and mineral raw materials.
Due to the differences in industrial structure and natural resources between China and Africa, the economic and trade cooperation between the two sides is highly complementary. The focus of trade cooperation is mainly on infrastructure and capacity cooperation, according to Yang Baorong, deputy director of the Institute of West-Asian and African Studies (IWAAS) of Chinese Academy of Social Sciences (CASS).
Thanks to the Belt and Road Initiative and the international capacity cooperation, many infrastructure projects in Africa have been launched, leading to the rising demands for the building materials.
China and Africa have mutual needs, mutual advantages and opportunities with each other. China-Africa cooperation has achieved transformation and upgrading. From the original government-based assistance to the current enterprise and market-based mutual benefit cooperation, the bilateral cooperation relationship has been upgraded to a new starting point, said Lin Songtian, Chinese ambassador to South Africa.
--- More potential to be tapped amid rising investment
Since 2000, China's top ten trading partners in Africa have accounted for about 70 percent of China-Africa trade volume. The two largest trading partners, South Africa and Angola, have accounted for 40 percent.
From the perspective of China's exports to Africa in 2017, the top ten export destination countries were South Africa, Nigeria, Egypt, Algeria, etc., accounting for 67.9 percent of China's total exports to Africa.
From the perspective of China's imports from Africa last year, the top ten sources accounted for 84.4 percent of China's imports from African countries, with South Africa and Angola taking the lion's share and accounting for 59.4 percent.
China is making efforts to improve its trade structure with the African countries and helping them to enhance industrialization. Huge potential needed to be tapped between China and Africa amid rising Chinese investments, said analysts.
In recent years, many Chinese steel, cement, and chemical companies have built manufacturing bases in Africa for localized production.
In the past three years, annual Chinese direct investment into Africa was about 3 billion U.S. dollars on average. By the end of 2017, China's investments of all kinds into Africa totaled 100 billion U.S. dollars, covering almost every country on the continent.
--- Joining hands to consolidate industry foundation for trade
In the long run, China should work with African countries to continuously improve the software and hardware environment of local businesses, improve the level of industrial development, and enable African countries to produce more competitive products in the Chinese market and even in the international market.
More Chinese enterprises should be supported to invest in Africa. They can make full use of the abundant natural resources and labor resources, promote the transformation and upgrading of African industries, and enhance the export capacity of African commodities. International capacity cooperation should be a solution. The Chinese enterprises can transfer textile, clothing, home appliances and other industries to Africa to achieve localized production and sales in Africa, according to Zhang Chenxu, an official of the Export-Import Bank of China.
In addition, China should increase financial support and further expand the scale of trade through more convenient and efficient financial services, said analysts.
For example, China-Africa Development Fund (CADFund) has enlarged its investment portfolio across Africa in recent years under the Belt and Road Initiative in areas such as agriculture, manufacturing, infrastructure development and industrial parks.
According to the CADFund, it has accumulatively invested more than 4.6 billion U.S. dollars in around 90 projects in 36 African countries, which has driven the Chinese enterprises' investment in Africa to more than 23 billion U.S. dollars.
(Edited by Hu Pingchao, [email protected])
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