Association for Free Research and International Cooperation

How Africa became collateral damage in US-China trade war

As the trade war between the US and China rumbles on, some African countries are becoming collateral damage in the dispute.

President Donald Trump’s administration wants to close the $400 billion (Dh1.46 trillion) trade gap with China, and placed tariffs of 10 to 25 per cent on about $250bn worth of Chinese goods.

Although Africa is not targeted in the dispute, many of the 54 countries on the continent depend on commodity exports, especially to China.

“It’s the old adage – when elephants fight, the grass suffers,” says Eric Olander, Beijing-based managing editor of the China Africa Project. “It’s interesting to see how many of Africa’s most resource-rich countries now depend on China for a sizable, if not an outright majority of their exports.”

South Sudan for example gets 95 per cent of its foreign revenue from oil exports to China, according to IMF data. For Angola, 60 per cent of its exports are oil and minerals to Beijing. Meanwhile, China takes 45 per cent of Zimbabwe’s exports of diamonds and other minerals.

Accordingly, the African Development Bank (AfDB) warns that the trade tensions could cause a 2.5 per cent reduction in GDP in resource-intensive African countries and a 1.9 per cent reduction for oil exporters by 2021.

In contrast, some of Africa’s most successful economies are far less dependent on the sale of raw materials. Ethiopia and Rwanda, countries with few commodities to export, will grow their GDP this year by 7.5 per cent and 7.7 per cent respectively, according to IMF projections.

“AfDB in particular expects a noticeable impact in the tradeable sectors, including export commodities like minerals, oil and food-related products,” Hanan Morsy, director of the AfDB’s macroeconomic policy department, said in Adis Ababa in February.

Even where the US-China dispute has bumped trade in Africa’s direction, the effects can be unwelcome. For instance, the US was a major supplier of soybean to China, with annual trade of around $12bn.

Read the original article here.

Credit image/thenational

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