Resource-rich African countries have benefited from massive investment from Chinese companies, which have increased their mineral production amid the global push for green energy. One such country is Zimbabwea major source of lithium, which has seen an influx of billions of dollars in investment and acquisitions from China as part of the Asian giant’s efforts to dominate the lithium-ion battery market.
Similarly, the Democratic Republic of Congo (DRC), which is the world’s largest producer of cobalt and a major source of copper, remains a major source of materials for China electric vehicle battery industry. China also imports minerals such as bauxite from Guinea and oil from Nigeria, Angola, Gabon and Ghana.
China’s largest trading partner in Africa is South Africa. In the first half of the year, the value of its trade reached $27.5 billion, according to Chinese customs data.
During the period, imports from South Africa increased by 10.7 percent to US$17.29 billion year-on-year, but China’s exports to the African country fell by 18.6 percent to US$10.2 billion.
South Africa’s exports to China are mainly minerals and metals, but more recently China has started buying products such as soybeans, wine, rooibos tea, aloe vera gel and citrus fruits.
Later this year, lawyers will be join this list after the two countries signed an agreement at the BRICS summit in Johannesburg last year.
“China is willing to speed up the process so that South African lawyers are appreciated by the Chinese people as soon as possible,” Chinese Ambassador to South Africa Wu Peng wrote on X on Wednesday.
Avocados are set to join the list of South African exports to China after a deal was struck at the BRICS summit last year. Photo: Xinhua
The deal comes as part of Beijing’s plan to diversify its food and agricultural trade and reduce dependencies China is therefore increasingly importing food products from Africa: avocados from Kenya and Tanzania, fruits from South Africa and Zimbabwe, coffee from Ethiopia and peppers from Rwanda. It has signed trade agreements with dozens of African countries, removing customs duties on 98% of taxable products from these countries.
China’s trade with Africa appears to be bucking the general trend, with China recording an overall increase in exports. In June, exports grew at their fastest pace in over a year, rising 8.6% that month, while imports declined 2.3% to a four-month low in June, amid weak domestic demand caused by the property crisis and economic slowdown.
Regarding African exports to China, Mark Bohlund, senior credit research analyst at REDD Intelligence, said rising copper prices are one factor behind the increase.
“Increased production volumes also play a role,” he said.
“The depreciation of the Nigerian naira and, to a lesser extent, the South African rand and the Kenyan shilling, have likely contributed to reducing Chinese exports, given that these are the largest markets in sub-Saharan Africa.”
But, he added, African exports to China are likely to weaken somewhat in the second half of the year, mainly due to lower copper exports.
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Electric vehicles made in China face additional import duties in the EU of up to 38%
Electric vehicles made in China face additional import duties in the EU of up to 38%
As copper prices have fallen due to the coronavirus pandemic and the slowdown in China’s economy, the price has recently has rallied Crude oil is expected to hit an all-time high in May, around $10,900 per tonne, breaking its previous record of $10,845 per tonne in March 2022. The price has declined slightly since the May record, but remains elevated at over $9,500 per tonne.
“I expect Chinese export growth to Africa to remain relatively weak, as growth in Nigeria and South Africa is expected to remain weak in the near term,” Bohlund added.
Charlie Robertson, head of macroeconomic strategy at asset management firm FIM Partners, said Chinese exports to Africa may have fallen due to sharp currency devaluations in Egypt, Nigeria and Ghana, foreign exchange restrictions in Ethiopia and austerity measures in Kenya and other countries.
For Africa to service its debt to China, he said it needed a trade surplus, not a trade deficit.
“How else could Africa earn the dollars it needs to repay China?” Robertson said. “The trade deficit reduction is a step in the right direction, but we really want to see the opposite in export and import totals in Trade between China and Africa.”
Unfortunately, he said, China has prioritized its own profits from Africa at every level of engagement – in its exports to Africa, in its loans to Africa and in requiring that those loans be made by Chinese companies to build infrastructure and supply goods.
“China’s top priority right now is to export out of its domestic real estate collapse“I expect him to try to boost exports to Africa over the coming year,” Robertson said.
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