Global trade shifts in China; an opportunity for African exporters

Global trade has shifted as traditional export leaders in countries such as the US, EU, and developed Asia have struggled to regain the momentum they had before the pandemic. Whilst China and other emerging markets have recovered faster than the traditional export leaders, economic and trade recovery are still underway in some markets. This recovery period however presents an opportunity for African exporters. China’s import partners have shifted in both trade volume and value even before the pandemic, with the US trade tensions, and now with other Pacific countries, China is relooking at who to prioritise its trade relations with. Where can Africa play a role in this shift?

When the US-China trade tensions intensified during the Trump administration, products such as soybeans from the US were affected, resulting in countries such as Brazil leaping for the opportunity to increase their export volumes. For some months in 2020, Brazil comprised over 90% of China’s overall monthly imports of soybeans despite the positive outlook of trade agreements between the US and China. This shows the emphasis China will continue to place on its strategic trade partners, namely other BRICS countries, and those in the African continent, to fill the gap needed in China’s trade resource needs.

Africa is a large continent, with each country having varying degrees of export specialties, be it in mineral resources, manufactured goods, agriculture & forestry, or others. Knowing where to expand a country’s capabilities in a certain commodity based on the shifting requirements of China is challenging but having a clear China strategic plan is crucial. In recent months, China is the world’s largest steel producer, and thus requires large shipments of iron ore to meet this demand. It has in recent months however shifted its reliance on its biggest source market in Australia for its iron ore imports to that of other trading partners. Again, Brazil has benefitted as it is the second largest exporter of iron ore to China after Australia, however China’s interest in Africa for its iron ore demand has also increased. Whilst countries like South Africa, Mauritania, and Algeria are already large iron ore producing and exporting countries, China has been investing in Guinea to explore and develop more countries to be export ready for this essential commodity. Projects such as the Simandou iron ore project in Guinea are expected to have a 100MT of iron ore production capacity.

China is the largest trading partner for many African countries but understanding which goods to export to this vast market is a strategic focus that should be on every African trade ministry’s agenda. China’s demand for certain resources such as iron ore presents an opportunity for more countries in Africa to vie for positions in China’s supply portfolio, but proactive preparation to be able to meet this demand requires action to happen immediately.

“This article is produced by Axis Group International and is published in The Econometer section of ChinAfrica magazine (July 2021), an English and French language monthly publication that provides news, views and analysis on all things China, Africa and China-Africa relations.”

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