Moody’s sees Africa–China trade threatened by consumption growth shift

The trade volume of about $170 billion between China and Africa in 2017 makes China the largest trading partner of Africa.
According to China customs statistics, China-Africa trade grew from $114 billion to $170 billion on a year-to-year basis representing a 49 percent increase.
However, the shift in focus from investment induced growth to consumption induced growth by China is likely to cause the trade volume with Africa to flatten.
China’s obligation to quality of growth and technology will cause African exporters of Oil and ferrous metals to see demand for their products stagnate as the consumption pattern of Chinese firm’s changes from primary manufacturing commodities to being a leader in the digital market and in the production of advanced manufacturing goods.
Other factors, such as increased international competition from commodity products like the U.S. Shale oil will further put a strain on the exports of oil by African countries like Angola, Congo and Nigeria thereby reducing their market share.
However, the report from Moody’s suggests that exporters of non-oil and non-ferrous metals will likely experience increased demand for their commodities. This can be linked to The Made in China 2025 initiative to make China one of the leading advanced manufacturing economies, which will increase copper demand to an additional estimated value of 232,000 tonnes.
If this viewpoint materialises African countries like Congo and Zambia are likely to benefit as one of Africa’s largest exporters of copper to China. Although, major oil exporting countries like Angola and Nigeria will likely see a reduction in their trade volume causing income to decline, the expected decline can be offset by changes in oil price.
BusinessDay expects that Nigeria’s trade deficit with China is likely to widen as the demand for oil by the worlds second largest economy continues to decline.