Trying Times Reaffirm Importance of China-africa Economic Relationship

What can now be characterized as an enduring economic relationship between Africa and China was truly tested in 2020. The beginning of the year saw a dramatic shift in how African markets approached the sourcing of goods, with the world’s largest exporter, China, experiencing a complete halt in production. While this shift forced sourcing managers to think about diversifying their supply chains away from China, the country defied critics by still posting positive growth in 2020, reaffirming its position as a robust economy. Thus, despite the challenging climate, the China-africa link proved resilient. While the pandemic laid bare the inherent risks in overreliance on a single source, China took seriously its role as the largest trading partner for African and many other markets globally, as it made interventions leading to a rapid recovery of activity.

China’s exports stood at $2.5 trillion in 2019, with figures for January to November 2020 coming in at $2.316 trillion. While early in 2020, exports had reached record lows, China’s rebound in the second and third quarters propelled it to a far more favorable position than other major economies. China was one of few countries posting growth in its exports, achieving growth of 8.8 percent in the third quarter of 2020. The improved conditions in China have served as a stabilizing force in Africa’s own efforts to restore economic vitality.

The African Development Bank Group has estimated that growth on the continent will experience a sharp decline, however, it remains optimistic for 2021. Southern Africa’s GDP was expected to decrease by 6.6 percent in 2020, but 2.2 percent growth is expected in 2021.

In the first quarter of 2020, China-africa trade fell 14 percent year-on-year to only $41 billion. China is the largest source country for most countries in Sub-sharan Africa. This high exposure to China was questioned early in 2020 as sourcing managers scrambled to meet orders. However, China’s rebound reaffirmed China as the ‘go to’ source market, because in subsequent months it proved itself to be one of the most buoyant economies amid the crisis. As one of the few countries to grow their economy in 2020 despite the pandemic, a continued, strong trade relationship with China is a crucial factor for Africa in achieving and growth again.

Many are optimistic that the pandemic will be brought under control in 2021, with vaccines being distributed and “normalcy” being restored. In the same way, African countries will look to nurse their economies back to health. While the risks associated with the highly integrated nature of the global economy became clear in 2020, the importance of integration was also reaffirmed. Africa’s lasting partnership and integration with China continue to act as something to be leveraged by African economies as recovery and developmental endeavors continue.

1/Nigeria November: China launched a Luban workshop in central Nigeria, with the aim of providing high-end technical skills training to help college students meet the requirements of the emerging global market. Vice Chancellor of Nigeria’s University of Abuja, Abdulrasheed Na’allah, noted that the workshop received support from Tianjin Sino-german University of Applied Sciences and Tianjin Railway Vocation and Technical College.

2/Uganda November: Chinese construction of Uganda's Karuma Hydro Power Plant is in its final stages despite numerous complications caused by the ongoing COVID-19 pandemic. Deng Changyu, Project Manager of Sinohydro Corporation, the projects contractor, said that the $1.7 billion project is 98 percent complete, and once complete will be the country’s largest power-generating installation. The 600 megawatts power plant is constructed both on the surface and underground, in the midwestern Ugandan district of Kiryandongo.

3/Namibia November: The national oil storage facility of Namibia’s state-owned National Petroleum Corporation (NAMCOR) received its first diesel consignment. The facility, with a capacity of 75 million liters of fuel, was built through a joint venture with China Harbour Engineering Company, Namibian Roads Contractor Company and Babyface Civils. In total, 35,000 metric tons of diesel were being offloaded at the new oil storage facility built at the coastal town of Walvis Bay.