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By Rutendo Mbiriri (1)
With China’s continuous emergence as a global power, its objectives are to attain stable economic growth, develop new markets, secure steady supplies of energy, gain political influence and enhance South-South partnerships. To this end, China’s strategic partnership with Africa is one of the avenues China is pushing to achieve its objectives. Since the 2006 Beijing summit of the Forum on China-Africa Cooperation (FOCAC) marked as the ‘Year of Africa,’ relations between individual African countries and China have deepened significantly.
As of 2008, trade between China and Africa surpassed the US$ 100 billion mark reaching a high of US$ 107 billion. From the year 2000, trade growth between the two averaged 3.5% per annum. However, the global financial crisis which began in mid-2007 has begun to impact on trade volumes between China and Africa. The first half of 2009 has seen trade decline by about 30.5%. This month’s newsletter will explore the causes and implications of this decline. It will also look at measure being put in place to boost trade.
Africa mainly exports raw materials such as copper, platinum, iron ore, timber, nickel, diamonds, gold and oil to China. In turn, China invests in crucial industries such as science and technology and infrastructure, and provides soft loans and grants amongst other things. Due to the economic crisis, prices of raw materials have been impacted on heavily resulting in a sharp decline. Prices for minerals such as copper and nickel have dropped by up to 80%. This sudden drop in resource prices has been a contributing factor to the 30% trade decline. Additionally, the financial crisis has negatively affected credit to finance imports and exports. |
Friday, October 2, 2009 at 15:50 