Friday, October 9, 2015

China, Africa, Commodities, and Economic Slowdown

The Financial Times published on 5 October 2015 an article titled "Africa Ties with China Are About More Than Raw Materials" by David Pilling.  This is a generally optimistic account suggesting that China's economic slowdown, lower commodity prices, and decreasing Chinese demand for commodities will not harm African countries that used the boom era in commodity exports to diversify their economies. 

The article points repeatedly to Ethiopia, which exports few commodities anyway, as the country which prepared for this eventuality.  The problem is that few, if any, major African commodity exporting countries prepared for a sharp drop in commodity prices and decreased demand from China.  Of Africa's 54 countries, you can probably count the Ethiopias on one hand.  More troubling, Ethiopia's trade relationship with China is far from ideal.  In  2013, Ethiopia imported more than $2 billion in products from China and exported less than $300 million worth of goods to China.  This is not a recipe for a sustainable trade relationship. 

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