The Impact of Rising Chinese Trade and Development Assistance in West Africa
The rapid economic rise of China over the last twenty years has sustained high global demand and prices for primary commodities such as oil and minerals, greatly benefitting Sub-Saharan (SSA) African countries. China now represents more than 20 per...
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2014/05/19583835/impact-rising-chinese-trade-development-assistance-west-africa-impact-rising-chinese-trade-development-assistance-west-africa http://hdl.handle.net/10986/18961 |
| Summary: | The rapid economic rise of China over
the last twenty years has sustained high global demand and
prices for primary commodities such as oil and minerals,
greatly benefitting Sub-Saharan (SSA) African countries.
China now represents more than 20 percent of SSA's
trade, up from just 2.3 percent in 1985. West Africa's
share in China's trade is still quite low, 0.6 percent
in 2012, but it is rising rapidly. Exports to China - oil,
iron, phosphates, gold, cotton, cocoa and cashew nuts, have
grown fast. However, they have not grown as rapidly as
imports, resulting in a large trade deficit with China (13
percent of West Africa's GDP over 2009-2012). Reasons
include a strong consumption demand for inexpensive Chinese
products as well as the import-content requirements in
development assistance agreements. Looking at the impact of
China on West Africa, it appears that West African producers
do not compete with China on third markets; by and large
their products are complementary. However, West African
producers are finding difficult to compete with China in
their own domestic as well as in regional markets. The
paper's main messages are as follows: Chinese demand
for primary commodities is likely to continue in the near
future, potentially benefitting West Africa. To maximize
these benefits, West African countries need to maintain
macroeconomic stability and to design appropriate policies
to manage the volatility of commodity prices while raising
the competitiveness of the economy. The current stagnation
of the agricultural and manufacturing sectors in many West
African countries is a sign of Dutch disease effects that
should not be underestimated and need to be readdressed; and
while the specific reforms needed vary from country to
country, they should be comprehensive enough to generate a
shift in the policy stance aimed at increasing productivity
and encouraging diversification in the tradable sector.
Examples of such reforms include the removal of trade
restrictions among West African countries, the dismantling
of formal and informal trade barriers to regional processing
activities and the improvement of trade logistics. |
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