China-Africa Barter Deals

The Asia and the Pacific Policy Society posted on 3 December 2019 an article titled "Can Ghana Solve Developing Countries' Foreign Currency Problems?" by Lauren Johnston, School of Oriental and African Studies.

Ghana recently signed a $2 billion dollar line of credit with China for financing and building infrastructure in exchange for Ghanaian bauxite. This is effectively a barter arrangement that avoids the need to pay with foreign currency. The gamble is whether the agreed price for the bauxite rises or falls against the benchmark. The deal has similarities to earlier arrangements whereby Angola obtained lines of credit from China paid back by exporting oil to China.

The arrangement in Ghana may lead to other barter deals in Africa, but not all African countries have significant amounts of natural resources or other products desired by China.