China-Africa trade now 2000 times more than in 1960 - CNBC Africa

China-Africa trade now 2000 times more than in 1960

Special Report

by Trust Matsilele 0

China-Africa trade now 2000 times more than in 1960. PHOTO: Foreign Policy Blogs

However, heavy reliance on Chinese exports could hamper Africa’s growth in the medium to long term according to the HSBC Global Research’s Multi-Asset report.

(READ MORE: China-Africa trade grows tenfold in a decade)

“A sharp slowdown in China’s growth trajectory would have a significant negative impact through lowering export demand but also reducing the prices of key commodities, particularly copper and iron ore,” noted the Multi-Asset report.

China-Africa trade was 210 billion US dollars in 2013, more than 2000 times higher than in 1960 which demonstrates how trade relations have expanded over the past five decades.

China relies for most of its commodities such as oil, copper, iron ore from countries in the Middle East and Africa.

(WATCH VIDEO: China-Africa trade pumps in billions)

“Exports to China accounted for more than 25 per cent of gross domestic product for Congo, Angola, and the Democratic. China accounts for almost 75 per cent of the Democratic Republic of Congo’s copper exports, 67 per cent of South Africa’s iron ore exports, and 60 per cent of Zambia’s copper exports,” added the report.

“The core of the relationship is China’s emergence as the dominant source of demand for the region’s commodities.”

The report added that Africa’s undeveloped capital markets were hindering financial flows into the region.

“The financial flows from China are generally hindered by relatively illiquid and underdeveloped capital markets as well as some capital account restrictions, particularly in Africa –perhaps with the exception of South Africa.”

The expansion of trade between China and Africa has also seen the region benefiting from Chinese tourists with also Chinese financial institutions benefiting from the trade relations.

“Chinese banks are gaining traction in the region as they support the activities of national champions and Chinese tourists are becoming a more common – and welcome – sight.”

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