How Might The Pandemic Increase Trade Between Africa And China?

We are aware that the recent COVID-19 pandemic has had a severe impact on the global economy. In fact, some research suggests that the world could lose up to $8.5 trillion dollars in revenue during the next two years. Still, we need to remember that every cloud has a silver lining.

Some regions of the world may benefit from the current crisis. This is primarily the result of changing patterns of trade. Experts believe that the African continent should begin trading with Asia more and less with regions such as the European Union and the United States. Why might this soon come to pass? Let’s take an in-depth look at the not-so-distant future so we can know what to expect.

The Chinese Influence

To be clear, China has already been extending its influence across Africa for some time. Businesses such as Huawei, China-Africa Cotton and King Deer all consider Africa to represent the next economic horizon.

Chinese exports to Africa have been rising steadily since as far back as 2002. China is now considered to represent one of the most powerful economies on the planet. This influence is showing no signs of slowing down. So, what’s the reason why trade between this Asian juggernaut and Africa could soon take on even more global importance?

More Stability?
Many individuals still associate nations such as India, the United Kingdom and the United States as trading powerhouses. However, this is not necessarily the case when compared to China. Before the pandemic got off the ground, China had already overtaken the western world in terms of becoming the primary destination for African exports. Africa had likewise begun to rely heavily upon China for a sizeable portion of its everyday goods. So, what happened when COVID-19 took hold?

The simplest way to describe the situation involves the notion of nations cutting their exports as soon as the pandemic took hold. As the African economy relied on western nations to an extent, this had a knock-on effect in terms of getting much-needed goods and services. China was there to pick up the proverbial slack; providing a much-needed sense of stability during uncertain times.

Recovering from the Pandemic

Photo by Fusion Medical Animation on Unsplash

Another issue to highlight involves how different regions are recovering (both socially and economically) from the COVID-19 crisis. This is why it is interesting to note that some studies have suggested that the recovery in the United States and Europe may be slower when compared to China. This uneven playing field could enable China to take the lead in terms of its trading relationship with the African continent.

As the Chinese economy is expected to pick up at a faster pace in comparison to its western counterparts, it only stands to reason those African consumers may come to rely on Chinese imports and exports to a greater extent.

Boosting the Intra-African Marketplace

Photo by James Wiseman on Unsplash

COVID-19 may have also exposed an “Achille’s heel” in regions that were more dependant on international trade agreements. North America and the European Union are two examples here. As this type of crisis was the first of its kind in modern times, it is understandable that its outcomes were not easy to predict. However, it seems as if higher levels of interdependence on trade might hurt more advanced economies.

This is one of the reasons why Africa could emerge from the pandemic relatively unscathed. This is also why we are already seeing many companies headquartered throughout Africa opening their doors once again for business (although with certain restrictions still in place). Assuming that western economies will be hit by the COVID for a longer period than China, it is perfectly logical to assume that Chinese trading relationships will become even more important.

A Mutually Beneficial Relationship
Finally, we need to touch on some basic economics. There are two main points to highlight here:

  • China can provide African consumers with cost-effective goods and services.
  • In return, Africa supplies many of the raw materials which China requires to fuel its fast-paced economy.

To put these observations another way, this essentially equates to a win-win situation for both parties.

A New Regional Dynasty?
We can now see why both Africa and China could be able to benefit from a changing economic climate. Might this situation one day outpace other global trade relationships? If we assume that the Chinese economy continues to grow at an incredible pace, this observation is not entirely out of the question.

Above all, more robust trade agreements between these two regions should benefit the average African citizen. If governments can adopt the appropriate regulatory policies, they could enjoy a bright future.

Author Bio:

Paula O’ Gorman is the manager at Promotive, a marketing agency helping brands with their marketing and digital marketing needs.

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