In Africa, trade was down but investment showed a rise

By Chu Daye Source:Global Times Published: 2016/12/22 18:23:39

Trade between China and Africa in 2016

Trade between China and Africa in 2016

In Africa, deepening economic cooperation bucked the trend of an overall difficult year.

From January to October, bilateral trade dropped 17.3 percent year-on-year to $121.99 billion, customs data showed.

Exports to Africa fell 14.7 percent while imports from Africa slid 21.2 percent. The margin of decline significantly outstripped the average level of decline seen with China's other trading partners in the same period.

According to estimates by the African Development Bank, the economy of the continent probably grew 1.8 percent in 2016, a two-decade low.

But Chinese investment into Africa was not affected by that slowdown. According to the Ministry of Commerce (MOFCOM), Chinese non-financial foreign direct investment (FDI) into Africa in the first 10 months of 2016 exceeded $2.5 billion, surging 31 percent year-on-year.

The strong figure underlined Chinese companies' confidence in the African market and their growing risk-management capacity, an MOFCOM statement said on December 15.

From January to October, Chinese FDI into Kenya and Uganda grew by more than 100 percent year-on-year, and a dozen multinational companies expressed interest in investing in the expansion area of the China-Egypt Suez Economic and Trade Cooperation Zone.

The expansion project is an addition to a Sino-Egyptian joint industrial zone, which was started in 2008.

He Wenping, an expert in African studies at the Chinese Academy of Social Sciences, said progress in international capacity cooperation and infrastructure was the highlights of the year,

"International capacity cooperation gained momentum in 2016. Development of industrial parks is making big strides in countries such as Ethiopia, Kenya and Tanzania," He told the Global Times on Sunday.

These pilot programs are answers to Africa's drive toward industrialization and their performance will be closely watched by other African countries if they succeed, noted He.

In October, the Ethiopia--Djibouti railway, built by Chinese companies, became fully operational. The railway - the longest electrified railway in the continent - links the Ethiopian capital Addis Ababa with the Port of Djibouti on the coast of the Red Sea.

He said the opening of the railway is a two-pronged achievement. It boosts Africa's connectivity and speeds up the industrialization process of African countries in the region. Landlocked Ethiopia now has valuable access to the sea while small, resource-poor Djibouti may achieve its goal of becoming a regional transport hub.

"The railway could boost development in places such as the Eastern Industry Zone [an economic cooperation zone established by the Chinese and Ethiopian governments] outside Addis Ababa. Currently, the park needs imports of materials via the railway; in the future, it can export its products to markets within the region and beyond, via Djibouti," He said.

He said social instability in some African countries, currency turmoil and an economic slowdown brought about by Africa's dropping commodity trade as well as Chinese companies' unfamiliarity with the African markets are still problems to be solved.

Posted in: ECONOMY

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