Overview on the China-Africa Trade Relationship

This paper investigates the China-Africa trade relationship which deepened 
since the year 2000 and became very productive in recent years. The paper 
scrutinizes the terms of trade, the investments made by China, and also the 
loans that African countries benefited from China. The analysis of the 
available data revealed that China has become an essential trade partner for 
Africa and between 2007 and 2017 mostly exported consumer goods, intermediate goods 
and also capital goods to Africa and imported raw materials and natural 
resources form African countries, with a favorable trade balance to China. From 
the year 2011 to 2017, South Africa appeared as the biggest trade partner of 
China in Africa, for the fact that it is the largest African exporter to China, 
followed by Angola, Congo, DR Congo, and Zambia, and also the largest importer 
of Chinese products, followed by Nigeria, Egypt, and Algeria. The paper also 
indicates that 15 African countries account for 80% of the Chinese FDI flow, 
led by South Africa with 19.04% of the total FDI over the period 2003-2017. 
Nigeria has the second position with 7.74%, followed by Zambia (7.55%), DRC 
(6.65%), Algeria (6.4%) and Sudan (5.28%). In addition, 15 African countries 
totalize 83% of the Chinese loans, with Angola in the first position with 
29.89% of the total amount of loans given by China between the years 2000 and 
2017. Ethiopia follows with 9.58%, then Kenya (6.84%) and Congo (5.18). The 
study recommends the diversification of export partners for some African 
countries that highly rely on exporting to China, encourages intra African 
trade as a diversification solution, and calls for more intra industry trade between China and 
African countries.


Literature Review
The international economic integration is one of the main economic developments affecting international trade in recent decades. Countries have become more open and closer to each other. Meanwhile, China which is the second world best economy and also the world's biggest exporter is playing an important role in the world economy and also in the world trade.
China has recently established trade partnerships with several countries from all parts of the world, including African countries. Indeed, the trade relationship between China and African countries has deepened in recent years, which led to an important increment of trade volume.
This situation has been shown in a McKinsey report that indicated Sino-African relations witnessed remarkable growth over the past decade, with bilateral trade up 20 percent and direct investment rising 40 percent annually [7].
Several researchers have analyzed the China-Africa trade relationship, but the recent findings reveal that exports to China have reduced recently due to a slowdown of the Chinese economy which shifted from manufacturing dependence to local consumption. This situation greatly affects Africa countries that essentially export to China.
Ruben Nizard (2017) mentioned that natural resources occupy 90 percent of the sub-Saharan African exports to China [8], while a diversification occurs in imports from China, illustrated by higher levels of machinery, electronics, manufactured products.
In the recent years, the Chinese economy has slowdown and is reoriented towards local consumption which has weakened the imports of commodities from Africa, which has consequently affected African countries that heavily depend on exporting to China.
According to Coface (2017) [8], crude oil is the most exported products to China, principally provided by South Sudan topping the ranking since 2011, while Angola and Congo are in second and third position. The Gambia occupies also a good position in the ranking based on wood production.
Giuseppe Crisafulli (2018) detailed Africa's most exported products by regions, as follows: In the east, the most exported goods to China are Food products such as Livestock, Coffee, and grains [9]. In the North, in Morocco and Tunisia, Ores and plastic goods have recently surpassed textiles, which were the main exports of that part of Africa. In the West, Cotton products were mainly exported by Mali, Benin, and Niger. In the south, Ores and other precious metals were the most exported to goods to China. More recently, China granted exporters from least developed countries benefits of preferential tariffs agreement, in order to support their exports and contribute to their economic development. Figure 1 shows the place of China in the economy of some African countries, and it can be observed that China benefited of 99.3% of the total exports of South Sudan during the year 2017. More than half of the total exports of Angola were destinated to China during the same year, while DRC, Mauritania, and Congo exported more than 30% of their total export to China Figure 1 supports the findings of Valentina Romei (2015) who demonstrated during the year 2014 that exports to China are very important for some African countries such as Eritrea where exports to China account for roughly 60% of the total exports. The share of exports to China is approximately 50% in countries like Congo, Angola, and Sudan [10].
Yet, it is also necessary to notify that the gradual diversification of Africa's exports, that experience increasing the transformation of raw materials which generates more value-added, and contributes to increasing the incomes of the population and creates jobs and enhances technology transfers.
Although exports to China shrink, African countries can rely on the local transformation of their natural resources and also on the Chinese aid and investment in sectors such infrastructure, energy, industry promoted by the Belt and Road Initiative which contributes to their development.
Ruben Nizard (2017) mentioned that the interests of the Chinese investors were into the African mining sector [8]. He affirmed that in 2013, China ranked first among the merger and acquisitions investors of Africa. The author cited Dealogic which stated that mining and oil sectors were estimated to 80 percent of the Chinese acquisitions in Africa.   Hai and Cohen (2017) affirmed that the Chinese firms in Africa are penetrating the African market and occupy principally sectors such as manufacturing, trade, construction, and services [11]. They have generated approximately $180 billion in revenues during the year 2017 according to Hai and Cohen (2017), adding that the more than 30% of Chinese companies in Africa operate in the manufacturing sector [11].
Yu Zheng (2016) analyzed the Chinese aid and investment in Africa over the period 2000-2013; he revealed that the top 15 African recipients cumulatively benefit of 52.1% of the total Chinese aid projects. Zimbabwe obtained the largest share of Chinese aid projects, followed by Tanzania and Ghana [12].
The findings of Yu Zheng (2016) indicated that the health sector is the major sector to which Chinese aid is allocated, accounting for 25% of the Chinese aid projects. The aid to governments and civil society accounts for 12%, followed by education accounting for 10% of the total Chinese aid. projects in Africa [12].
Also, the top 15 destinations totalize 71.7% of Chinese FDI projects led by Nigeria and South Africa which are among the top trading partners of China in Africa and also the most economically powerful countries on the continent. projects in Africa over the 2000-2013 period.
Yu Zheng (2016) presented, as illustrated in Figure 2 the repartition of the Chinese investment in Africa by sector of activity, and showed that manufacturing sector attracts over a quarter of the Chinese FDI in Africa (26.8%), followed  , and Mining and quarrying with (12%). The Agriculture sector attracted similar percentages of aid and investment projects (6.5% and 6.6%) [12]. More recently, 10 major plans to boost cooperation between China and Africa were announced during the second FOCAC summit in South Africa (see Table  1). Table 1 illustrates projects totally or partially financed by China and executed by Chinese companies which aim to boost economic development in Africa through infrastructure improvement. These infrastructure projects will generate economic activities in their area and create jobs which definitely will improve the social welfare of the local populations. The contribution of China to the development of Africa is undeniably shown through financing the above projects.
Impact of trade with China and Chinese investments in Africa From the year 2000 which is practically the beginning of the active presence of China in Africa till date, we can assuredly affirm that China considerably contributed to the development of African countries. Several reasons support this statement. and generated tax to the local governments, as an example, can be cited the industrial park in Egypt, where more than 95 percent of the employees are locals and whose professional and managerial skills have been developed [17].

Terms of Trade between Africa and China
Since

China-Africa Trade Balance
The observation of Figure 4 shows that the trade balance was sensibly neutral

Trading Partners of Africa
Africa is a continent that has been colonized by countries from the west, and most countries of Africa have strong links with their former colonial masters. The observation of Figure 5 shows that the European Union as a group is the main destination of African exports, followed by Africa which describes the level of intra trade between African countries. African exports to the United States of       The figures also show that African countries export more to India than they import.

Imports and Exports Products between China and Africa
As Africa is known for its abundance of natural resources, the main reason for the Chinese presence in Africa is obviously to seek for natural resources. The following tables tell specifically about the nature of products exchanged between China and Sub Saharan Africa, classified by groups of products and categories of goods.
The observation of Table 2    (1.37%), which is totally exact, as Africa has a comparative advantage in raw materials. This table confirms that the China-Africa trade is mainly an exchange of raw materials against manufacturing products. This finding supports the economic theory claiming that countries mostly export what they are abundant in and import what they have no comparative advantage in.
The following tables detail the trade composition between China and Africa. Figure 7 shows that raw materials are the main exports of Sub Saharan African countries to China. The level of consumer goods and capital goods is very low which indicates the difficulty for African countries these products to China, mainly due to the comparative advantage that China has in terms of capital goods and also the difficulty for African products to meet the consumer preferences of the Chinese market. Figure 8 shows that Sub Saharan African countries import more capital goods than other types of goods.    The observation of Table 3

Top African Exporters to China
As it has been shown previously, China imports mainly raw materials from Africa, which means that the African exporters to China are obviously those rich in raw materials. The following table presents them in details from the year 2011 to 2017.

Top African Importers of Chinese Products
The following table shows the most important importers of Chinese products on the African continent.
The observation of Table 5

China's Investments in Africa
According to The World Investment Report 2018 published by UNCTAD, China's outward FDI flows and stock in 2017 accounted respectively for 11.1% and 5.9% of the global total. In terms of FDI flows, China was in third position worldwide [23].        However, the borrowing capacity of many African countries is shriveling, with an average public debt that has risen from 34 percent of GDP in 2013 to roughly 53 percent in 2017 in sub-Saharan African countries. Angola, Gabon, and Nigeria which are oil-producing countries have their debt service amounts exceeding 60 percent of government revenues. Also, in sub-Saharan Africa, more than 40 percent of low-income countries are declared at high-risk of debt distress [30].
Moreover, China has changed its strategy towards Africa which was initially "resources for infrastructure" to a new approach which is aimed at investing in

Chinese Loans to African Countries
China has recently pledged huge amounts of money to support economic de-

Recommendations
The development of intra industry trade with China is primordial to African In this perspective, China appears to be a good interlocutor, with its developed manufacturing sector and also high machinery production levels. Due to the technological gap, access to the Chinese market seems difficult for African products apart from raw materials. In such a case, African countries should import light manufacturing machinery to foster the transformation of agricultural products necessary for countries' food self-sufficiency. Moreover, further cooperation should be planned for the sake of acquiring more machinery and technology needed to improve agriculture performance and also enable the transformation of the variety of agriculture products abundantly available on the African continent.
Also, the diversification of export destinations has to be effective in the African countries that highly rely on exporting to China, reaching more than 50% of their total export for some of them. Diversifying the export partners will reduce the dependence on China and avoid eventual negative consequences that can occur in case of demand decrease. The diversification can be done through the Intra African Trade. Indeed, the African continent constitutes a very big market with its dense population which is estimated to exceed 2 billion inhabitants by 2040 [33].
Promoting intra African trade is nowadays a must for African countries in order to depend on themselves and not long in developed countries. As mentioned by The World Bank (2015), greater trade integration between African countries leads to poverty reduction which is also the goal of the international institution [34]. Furthermore, the recently born African Continental Free Trade Area (AfCFTA) signed by 44 African countries aiming to bring over 1.2 bn people together into a common market is a great initiative. African leaders are therefore encouraged to ensure its effectiveness and full operation including the totality of the 55 African countries making it the world's largest free trade area by member states and its definitely envisaged to lead Africa to better-living conditions and undoubtedly economic prosperity.

Conclusions
The Africa is the largest African country exporting to China, followed by Angola, Congo, DR Congo, and Zambia, and also the largest importer of Chinese products, followed by Nigeria, Egypt, and Algeria, Kenya, Ghana, Morocco, Tanzania, Angola, Ethiopia which are also among the richest countries of Africa. The China-Africa trade balance is favorable to China mainly due to the dependence of Africa's economy on raw materials which generated a large deficit caused by the decrease in commodity prices on international markets.
South Africa is also the most attractive country for Chinese investment in Africa followed by Nigeria and Zambia, while Angola is the largest beneficiary of Chinese loans among African countries.
The contribution of China to the development of Africa is very effective and prolific. Indeed, in recent years, China has impressively invested in infrastructures and several other development projects, such as energy, education, health, which significantly improved the welfare of the African population.
However, there is still more to do for China to become indispensable to Africa's development; for instance, the Chinese investment in Africa which has increased recently but is low compared to the investments of other countries in Africa. The Chinese entrepreneurs in Africa are told to contract seekers and loans providers instead of operating and competing on the African market.
Furthermore, scholars believe that infrastructure and manufacturing are two key economic drivers that will boost the economic development of African countries and facilitate their access to the international value chain that will really be a take-off for the African continent.
Meanwhile, Africa also faces many challenges which are social and political instability, unemployment, terrorism. These problems have to be solved for better cooperation with partners in order to improve the development of Africa which is full of potentialities.

Conflicts of Interest
The author declares no conflicts of interest regarding the publication of this paper.