In the past two decades, the Chinese economy has been the most widely discussed economy in the world. When China began its economic reforms in the early 1980s, it was a poor country with a GDP per capita of less than $200 and a GDP of less than $200 billion. Forty years later, China has a GDP per capita of more than $10,000 – 50 times larger than in 1980 – and an economy of around $15 trillion, 75 times larger than it was in 1980. To put things in perspective, during the same period, the US economy grew by seven times (from around $3 trillion in 1980 to $21 trillion in 2020) and its GDP per capita by five times (from around $13,000 in 1980 to $65,000 in 2020). Smaller economies do tend to grow faster than more mature and larger economies, but China’s continuous average annual growth rate of 10 percent per year in the past four decades has been unparalleled in modern economic history. One important consequence of such rapid economic growth has been the lifting of more than 800 million Chinese citizens out of poverty, putting China in the upper-middle-income category of countries. Trade has been the main driver in the Chinese growth story. Chinese exports grew by more than 143 times between 1980 ($18.1 billion) and 2020 ($2.6 trillion). In other worlds, while China was responsible for less than 1 percent of global merchandise exports in 1980, today, it commands more than 15 percent of the total merchandise exports around the world.
Over the past two decades, the Sub-Saharan Africa region (SSA) has gained significant importance in Chinese state-directed industrial and trade policies, leading to an increasing share of China in SSA’s total trade and vice versa. China’s total merchandise trade (referred to for simplicity here as “trade”) with SSA has increased by a whopping 1,864 percent between 2001 and 2020. As shown in Figure 1, China has been emerging as a major trade partner for SSA in the past two decades, while the commercial ties of the European Union and mostly that of the United States with SSA has been on the decline. Specifically, the share of China in SSA’s total trade – imports and export – has increased from 4 percent in 2001 to 25.6 percent in 2020, while during the same period the share of the EU and the United States in SSA’s total trade declined from 30.3 to 22.3 percent and from 15.5 to 5.6 percent, respectively.
Minerals, metals, agricultural products, and crude oil are the main exports of SSA economies to China. Specifically, in 2019, SSA accounted for more than 16 percent of all crude oil imported by China, and the size of SSA crude exports to China grew by more than 100 percent between 2008 and 2019 – 0.7 million barrels per day in 2008 to 1.5 million barrels per day in 2019.
It is critical to note here that China overtook the United States as a trading partner of SSA immediately after the 2007-09 global financial crisis (GFC). Less affected by the GFC, the size of China’s trade with SSA continued to increase during GFC, while that of the United States declined sharply and has continued to decline since 2011 (see Figure 2). In this way, there is a stark similarity between SSA and the Middle East and North Africa (MENA) regions as China’s trade with MENA also overtook US-MENA trade immediately after the GFC (see Figure 2). One reason has been diverging trends in energy imports: while there has been growing demand in China for energy imports in the past two decades, US crude and natural gas imports started declining from their peak in 2007 as the United States took serious steps towards energy independence after the GFC through the expansion of shale oil and gas production – justified by the high oil prices through most of the 2007-14 period. Moreover, China’s investment has also been increasing in similar sectors across the two regions in the past decades: energy, metals, real estate, and transportation. The glaring similarity of China’s growing role in investment and trade in SSA and MENA points to a shifting of balance and realignment from West to East in these regions, at least in economic and trade fronts.
Not only has China become an increasingly strategic trade partner for SSA in the past two decades, SSA’s share in China’s total trade has also increased during the same period: from 1.48 percent of China’s total trade in 2001 to 3.18 percent in 2020. At the same time, SSA’s weight in the EU’s total trade stayed relatively the same – 1.3 percent in 2001 and 1.2 percent in 2020 – while it experienced a decline in the United States – 1.5 percent in 2001 to 0.85 percent in 2020 (see Figure 3). In other words, SSA’s weight in China’s total trade increased by more than two-fold in the past two decades, while it remained relatively constant for the EU and declined for the United States.
This is further illustrated by the fact that in 2019, out of the forty-two SSA countries with available trade data, China was the top exports destination and imports origin for thirteen and twenty-six SSA economies, respectively. Moreover, China was among the top three exports destinations and imports origins for twenty-two and thirty-nine SSA economies, respectively. In the same year, China accounted for more than 20 percent of a country’s imports and exports for sixteen SSA economies, while more than 50 percent of imports of eight SSA countries were originated from China (see Figure 4).
Finally, similar to the findings on Chinese investment and construction in SSA, on average, while SSA countries with access to seaports have an advantage over the landlocked ones when it comes to trade with China, the commercial ties of forty-five out of forty-nine SSA economies experienced substantial growth rates ranging from 439 to 184,101 percent in the past two decades (see Figure 5).
The evidence highlighted above suggests that SSA and China view each other as increasingly strategic trading partners, and the commercial ties between SSA and the US and EU has relatively declined in the past two decades. While the EU has negotiated a set of free trade agreements with most of SSA economies, such agreements have done little to slow down the growth of commercial ties between SSA and China, even though the EU has clear advantages over China in terms of geographic proximity and historical ties to the region. Moreover, Brexit has introduced some challenges in the ability of the EU to successfully negotiate as one common market with SSA. In the case of the United States, since 2000, the African Growth and Opportunity Act (AGOA) has provided eligible SSA economies with tariff-free access to 1,800 products in the US market. According to the Office of the U.S. Trade Representative (USTR), thirty-eight countries were eligible for AGOA program in 2020. Nonetheless, as discussed earlier, the commercial ties between the US and SSA have deteriorated, and China has been filling up most of this gap.
The increasing presence of China in SSA alongside the relative decline of commercial and economic ties of the United States and EU in this region have increased the risk of supply chain disruptions for the United States and the EU in many strategic commodities, such as Cobalt. At the same time, China’s growing economic activities and investments in SSA has meant greater access in the region, with Beijing eying many SSA countries as potential political and military allies, posing serious geo-security challenges for the United States and the EU in the long run. As a result, the growing strategic importance of SSA for the United States and the EU necessitates a common US-EU front to face China’s expanding commercial, investment, and construction activities in this region. The latest joint action of the United States, the United Kingdom, Canada, and the EU to impose sanctions on Chinese entities who are believed to be associated with serious human rights violations in Xinjiang region of China, is an example of US collaborating with its close allies to confront China’s human rights violations. Although, this move has threatened the ratification of China-EU Comprehensive Agreement on Investment (CAI) on both ends, it has sent a clear signal to China, that despite their disagreements, the United States and the EU are once again ready to partner in confronting China’s human rights violations and global ambitions. The recent launch of Build Back Better World (B3W) by President Biden and G7 leaders is an example of a partnership model that could show the commitment of the United States, the EU, and their allies to the development of SSA – and other less developed regions – while also confronting China’s seemingly limitless expansion in SSA and the developing world. Complementing B3W initiatives in SSA with bilateral and multilateral trade agreements could restore dwindling economic ties between the United States and strategic SSA economies. It is true that Beijing’s Belt and Road Initiative (BRI) is eight years ahead of B3W and 139 countries – including Italy – are formally affiliated with it, but there remains significant infrastructure gaps in SSA for initiatives such as B3W to address. After all, it is better late than never.
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