Africa's de-industrialization: China is hollowing out Africa's manufacturing sector

Challenge: Some argue that Chinese exports are either preventing or hollowing out Africa's manufacturing capacity.

Africa has an overall trade surplus with China of around $10 billion. However, this is due almost entirely to the natural resource exports from a few aforementioned countries, which provide nourishment for China's own domestic economic transformation. While Africa's exports are dominated by a handful of commodity-exporting countries, Africa's imports have a broader print across the African continent. Africa's imports from China increased from $3 billion in 1992 to $45.4 billion in 2008. In the process, China usurped France, the U.S. and others, to become Africa's dominant source of goods in late 2006. Chinese exports to Africa proved particularly resilient to the global recession – relative to Africa's exports to China and African imports from other trading partners. For instance, Africa's second- and third-largest source of goods, France and the U.S., experienced export declines of 13 percent and 15 percent year on year in 2009, respectively, while China's exports to Africa declined by a mere 6 percent year on year.

More than two-thirds of African countries run sizeable trade deficits with China. A dozen African countries imported more than $500 million from China in 2008. And, even though South Africa ($8.7 billion), Nigeria ($6.4 billion), Algeria ($3.7 billion), Benin ($2.3 billion) and Morocco ($2.3 billion) dominate in nominal terms, accounting for 60 percent of total African imports from China, it is clear that a significantly larger proportion of African countries sources goods from China. In fact, nearly 32 African countries list China as a top-five source of imports.

Low-cost consumer products flowing into Africa from China's coastal factories have grown rapidly in recent years. According to Trevor Manuel (2004), China's manufacturing expansion in an environment of low wages is a challenge for a host of African industries; Africa should find ways and means to engage with that reality. Electrical equipment; and nuclear reactors, boilers and machinery each account for 17percent of total African imports from China. Vehicles account for 8.5 percent of Africa's imports from China. In fact, China provides Africa with 10.2 percent of its vehicle imports. Both cotton and articles of iron and steel amount to above 6 percent of Africa's total imports from China, respectively. In fact, 10 percent of Africa's cotton imports come from China. Similarly, a large proportion of artificial filament (10 percent), ceramic product (9 percent) and glassware (5 percent) that is imported by Africa originated from China.

The important challenge facing the continent is not unique to Africa and does not reflect an Africa-specific deficiency. It is important to realize that the composition of Africa's imports from China is consistent with other emerging markets. Consider that, in 2008, intra-BRIC trade amounted to around $190 billion. China's individual trade with Brazil, India and Russia exceeded $50 billion, meaning that three-quarters of intra-BRIC trade included China as a counterparty.

China's imports from India amounted to $20 billion and were dominated by ores, slag and ash; organic chemicals; pearls; iron & steel. China's exports amounted to $31.5 billion and comprised electrical equipment; machinery; fertilizers and iron & steel.

China's imports from Brazil amounted to $30 billion and were, like the case of India and Africa, made up of resources, such as ores, slag and ash; mineral fuels; oil seeds, pulp; iron & steel; copper and tobacco. China's exports to Brazil amounted to $20 billion in 2008, comprising mostly electrical equipment and machinery.

China's imports from Russia breached $23 billion in 2008, with mineral fuels, wood; iron & steel; nickel; fish; and ores accounting for the lion's share. Meanwhile, China's exports to Russia amounted to $34 billion and machinery; electrical equipment; footwear; vehicles; and plastics made up the largest share.