What are the secrets?, China Africa Trade Exceeds the United States Article | Africa | United States

On June 26th, the website of Citizen Daily in Tanzania published an article titled "Why China is Overtaking the United States in the Competition for African Trade", written by Peter Kaguanja, Director of the African Policy Research Institute in Kenya. The full text is excerpted as follows:

The pain brought about by the "New Cold War" between the United States and China cannot be ignored. French Enlightenment philosopher Montesquieu believed that trade brought peace. In stark contrast to his argument, the tense relationship between the world's two largest economies is manifested as a "trade war" caused by protectionism and trade barriers such as tariffs.

Africa is one of the centers of the intense Sino US trade war. In the past 20 years, China has risen to become an undisputed market leader in Africa; The United States, on the other hand, lags behind and strives to catch up.

China has become an important trading partner that Africa cannot ignore. Since surpassing the United States in 2009, China has been Africa's largest bilateral trading partner. China has the world's largest market that Africa needs. Last year, China's trade volume with African countries reached a record high of 282 billion US dollars.

Similarly, China's discovery of Africa as a new frontier in global trade is difficult to ignore. Africa has extremely abundant strategic natural resources. This continent has approximately 30% of global mineral reserves, 12% of oil reserves, and 8% of natural gas reserves. Africa has 60% of the world's potential arable land, making it a new frontier in global food security. It is expected that the population of Africa will reach 2.5 billion by 2050, potentially becoming the world's largest and youngest market.

In Africa, China is implementing Montesquieu's view that trade can bring both peace and development. Its message is very clear: trade creates employment, promotes prosperity, and lifts people out of poverty. Since the reform and opening up, Beijing has carried out bold market reforms and trade liberalization, which have lifted over 800 million people out of poverty!

On January 23rd, in Lagos, Nigeria, a fully loaded container ship was anchored at the Laiki Deep Water Port. The Laiki Deepwater Port project in Nigeria, invested, constructed and operated by China Harbour Engineering Co., Ltd., held its opening and operation ceremony on the 23rd in Lagos Oblast, southwestern Nigeria. Shen Jizhong

There are many reasons why China has become an undisputed market leader in Africa.

Firstly, from the beginning, China focused on opportunities rather than challenges in Africa's emerging but turbulent markets.

Secondly, as the West views Africa as a "hopeless continent", China has seized the infinite opportunities posed by countries recovering from conflicts to expand its business footprint.

Thirdly, Beijing regards Africa as an emerging market: compared to other competitive global markets, the competition in this market is less intense and investment difficulty is also lower. Chinese investors have a long-term vision for trade and profitability, and if they anticipate uncertain moments, they will suspend their business instead of withdrawing from Africa.

Fourthly, China believes that African consumers in the 21st century have rich experience, strong brand awareness, and broad knowledge, so it has adjusted its market strategy accordingly. It targets low-income consumers and realizes that the bottom of the pyramid is the future of the African market.

Fifthly, China avoids a one size fits all approach to Africa and instead takes into account the unique challenges and opportunities of each country.

Based on the new development cooperation framework of the Forum on China Africa Cooperation, and connected with the the Belt and Road Initiative, an infrastructure project worth trillions of dollars in China, the trade volume between China and Africa is soaring.

Nobel laureate in economics Joseph Stiglitz correctly pointed out that "inadequate infrastructure is a much more serious barrier than tariffs in developing countries." Through this development cooperation framework, China has provided funding for infrastructure that connects the African continent with global trade networks and supply chains.

Over the past 20 years, China has invested over 155 billion US dollars to build and upgrade over 10000 kilometers of railways, nearly 100000 kilometers of roads, over 1000 bridges, and 100 ports in Africa, as well as 66000 kilometers of power transmission and distribution systems. This infrastructure has opened the door to trade and investment for Africa.

However, the sustained trade imbalance that benefits China has forced Beijing to take a series of measures to rebalance its trade relations with Africa.

Firstly, it has signed bilateral trade agreements with African countries to eliminate tariffs and other trade and non-trade barriers.

Secondly, Beijing is diversifying and increasing imports of agricultural products from Africa. China announced at the 8th Ministerial Conference of the Forum on China Africa Cooperation in 2021 that it hopes to import a total of 300 billion US dollars from Africa in the next three years.

Finally, China supports industrialization in Africa and adds value to African export products. More African countries are connected to China's "Silk Road e-commerce".

Trade promotion is one of the nine projects proposed in the 2035 Vision for China Africa Cooperation. In this context, China has pledged to invest $10 billion to promote African exports and continue to support the construction of a free trade area on the African continent.

Obviously, in the new African war, China is overtaking the United States. However, for the African continent, which only accounts for 1% of world trade, to fully integrate into global trade and supply chains, the means must be clever.