Business
China’s slowdown: What it means for African trade
Which African countries will be impacted the hardest?
In 2014, almost 80 percent of China’s crude oil imports from Africa came from Angola, Republic of Congo, Sudan and South Sudan – with Angolan exports making up 61 percent. Crude oil exports from Equatorial Guinea and Nigeria account for 5 percent and 3 percent respectively.
Trade data from the first quarter of this year reveal the impact the drop in the oil price had on the value of crude oil imports from Africa. Angola’s oil exports to China were valued down 50 percent from exports in the first quarter of 2014, while Sudan and South Sudan were down 58 percent and Equatorial Guinea down 53 percent.
However, more importantly, countries such as Sudan and South Sudan exported almost 90 percent of its total crude oil to China last year, whereas the Republic of Congo exported 65 percent and Angola 50 percent – revealing a reliance on Chinese demand. Conversely, China only absorbed around 2 percent of Nigeria’s total crude oil exports in 2014.
In iron ore, 95 percent of Chinese imports from Africa came from 3 countries in 2014 – South Africa (62 percent), Sierra Leone (21 percent) and Mauritania (12 percent). Around 73 percent of South Africa’s total global iron ore exports were absorbed by China, illustrating the country’s exposure to a Chinese slowdown.
The impact of the fall in the iron ore price, as well as cooling Chinese steel production growth, has been felt in the first quarter of 2015 too, noted Freemantle. The value of South Africa’s exported iron ore to China dropped near 56 percent from the first quarter of 2014, while exports from Sierra Leone were down almost 80 percent and Mauritania over 74 percent. In Sierra Leone, production at its Tonkolili Mine, which holds the world’s largest iron ore deposits, has also been halted.
And in copper, 87 percent of Chinese imports from Africa in 2014 originated from Zambia and the Democratic Republic of Congo (DRC), with a further 7 percent from South Africa. Roughly 40 percent of Zambia’s total copper exports were absorbed by China, 42 percent for the DRC, and near 60 percent for South Africa.
In the first quarter of 2015, copper exports to China are down 51 percent in value compared to the same period in 2014, while exports from the DRC slid almost 30 percent. However, iron ore exports from South Africa to China lifted almost 3 percent between first quarter of 2014 and 2015.
Investment and political relations
Despite the Asian powerhouse’s slowing growth and its resulting knock to commodity imports from Africa, Freemantle expects the Chinese government and firms to continue their long-term strategic geopolitical relationships and investment across the continent.
