The African countries have to fear from the trade conflict between the United States and China, little. Quite the contrary, their importance might even increase if the African free trade zone.
Truck on a dirt country road in Burkina Faso
Investors and trade partners in Africa at present is the Jack in the Hand. In mid-June, the United States invited to the US-African business summit in the Mozambican capital, Maputo, to “the durable and sustainable partnership between the United States and Africa” – was to promote the Summit theme. The United States also presented their new “Prosper Africa”Initiative, which aims to improve trade and investment.
Only a few days later, Beijing stressed the good relations to Africa. Joint projects should be sustainable, said foreign Minister Wang Yi this week and rejected criticism that China would push African countries with loans in the debt trap. Such allegations showed a lack of understanding of the “real and true friendship between China and Africa,” Wang says.
Race to market access
“China, the United States and, to a certain extent Europe are engaged in a competition in order to strengthen their economic relations with Africa,” says Giovanni Valensisi, Africa specialist Economist at the UN conference on trade and development (Unctad) in Geneva. “So you want to improve your chances on the African market, which is characterized by a young population and dynamic growth.”
Heads of state and government at the economic summit in Maputo on 19. June 2019
The Deputy Secretary of Commerce, Karen Dunn Kelley, the ambitions of the USA to open. “US exports to Africa have declined since their peak in 2014 to 32 percent,” she said at the summit in Maputo. “We want to reverse this Trend.”
The interest comes not by chance, because at the end of may has finally brought the continental African free trade zone (AfCFTA) on the way. The current climate of Trade disputes and PROTEK ionismus have made the Africans once again clear how important this agreement is, believe Unctad Economist Valensisi.
“It belongs to the strategic objectives of the African free trade zone, to arm the countries of the continent better against such situations”, so Valensisi to the DW. “The stronger the intra-African market are growing together, the better your negotiating position with the major powers USA and China.”
Dependent on China’s hunger for Commodities
So very safe, the Position of the Africans, however, is not. Because of the trade dispute with the United States dampens the economic growth of China, and China grows, the less its demand for the raw materials, which buys it from Africa, including Oil, iron ore or metals.
However, this effect is currently in the borders, said Klaus-Jürgen Gern from the Kiel Institute for the world economy (IfW). “We look at the prices on the commodity markets that currently, there is no crisis”, the researchers of the DW. “The prices have declined from the peak values at the beginning of 2018 something. But you are well above the levels by 2016, as worldwide commodity prices have plummeted.”
Another risk for small – and that is that the African countries could be forced to choose a side, to do so with either the US or China shops. Happy to see no signs that China is driving such a course. “And the Americans would be likely to be very difficult, if you were to compete against the strong presence of the Chinese, now with an exclusive claim.”
The Africans would be well advised to now focus on the speedy implementation of their continental free trade zone. Here is a lot of work is still waiting, but the opportunities are enormous. Currently, African countries find it hard to act with your neighbors on the continent, in contrast to Europeans or Asians.
Goal: More Value-Added
The Transition to a real free trade zone with 1.3 billion people could increase intra-African trade by 33 percent, according to a new report by the Unctad. “I see currently a strong political will did not exist before,” says Giovanni Valensisi, has co-authored the report. Now clear and simple rules would have to be prepared to make the trade in African products easier and cheaper.
Also, the notoriously bad infrastructure needs to be improved. “The economic centers need to be connected to each other, so that they can engage in trade,” said Klaus-Jürgen Gern from the IfW. “Here the Chinese can be with your investments help, but it’s not from today to tomorrow.”
“However, trade does not automatically lead to sustainable development for all, and also not to more jobs,” says the Unctad report. To achieve this would be to build the African countries ‘ own value chains. Because currently it is still everyday life, what is the Unctad report describes the example of cocoa.
“West African cocoa producers to export unprocessed cocoa beans outside of the continent, while chocolate manufacturers in Egypt and South Africa need to import the cocoa butter and other ingredients from outside of Africa.” Similar can be observed for many raw materials, the report said. “The continental free trade zone could help to change that.”