Business
China’s slowdown: What it means for African trade
By Kate Douglas
China’s slowing growth, coupled with the fall in commodity prices, could see African exports to the Asian country almost halve in value this year – from a reported US$116 billion in 2014 to around US$60 billion. This is according to recent research by Standard Bank’s senior political economist, Simon Freemantle.
Over the past 15 years, China has become Africa’s largest trading partner. However, with exports to China remaining generally un-diversified and consisting mostly of commodities, the continent has grown dependent on Chinese demand. Two-thirds of the value of African exports to China last year consisted of crude oil or base and precious metals, notes Freemantle.
Statistics show that while Chinese imports of key commodities were up in 2014, there was a slowdown in demand momentum compared to previous years.
“For instance, though between 2013 and 2014 Chinese imports of iron ore lifted by 14 percent; of copper by 18 percent; and of crude oil by 9 percent, these rates were all inferior to the general pace of growth achieved since 2008 (let alone between 2003 and 2007),” writes Freemantle.
Other commodity imports – such as coal, manganese and chromium – had all declined from the previous year.
However, trade statistics for the first half of 2015 most acutely portray how the pace of growth of Chinese commodity imports has slowed. For example, in the first six months, China imported 0.9 percent less iron ore than during the same period the previous year.
“Should this trend continue, China is set to record a year-on-year fall in iron ore imports for the first time in over two decades.”
This slowing demand can be seen over the last 2 years, and indeed the first few months of 2015, in terms of value of African commodity imports, with the fall in commodity prices playing a large role. In the first quarter of 2015, the value of crude oil imports from Africa was 50 percent less than the it was in the first quarter of 2014. In addition, iron ore imports contracted 55 percent in value terms, while copper imports from the continent slid 39 percent.
“Should the rest of 2015 proceed in much the same fashion as it started – as reflected by the first quarter of 2015 trade data – it is safe to assume that this year will see a profound dip in the value of African exports to China,” continues Freemantle.
