At the present time, the world is experiencing important and profound changes, the most striking of which are the determination of African countries and the development of China. As a growing force, economically and politically on the international scene, China and the countries of Africa, notably West Africa, are constantly strengthening and expanding their relations with reciprocal advantages.
This implies significant effects for the evolution of the international order. These time-tested relations and international upheavals over the last fifty years have entered into a stable orbit of continuous development and constitute economic cooperation at different levels.
Considerations on International Economic Relation
China-West Africa partnership relations are a new type of model in international relations that must be strengthened, developed, cemented and ordered. These relations are based on the possibilities of developing cooperation at the highest level in economics, trade, science, technology and infrastructure. West Africa is a region composed of 15 countries rich in raw materials and natural resources (petroleum, gas, gold, diamonds, zircon, uranium, limestone, phosphate, nickel, cocoa, cotton, coffee etc.). In reality, China displays an economic pragmatism and a certain cynicism, ready to recover in poor or developing countries or under the yoke of totalitarian governments, neglected markets or natural resources and western countries. For Western Africa, China is an ideal economic and commercial partner, which imposes no particular political conditions on its suppliers and even provides them with diplomatic support. West Africa is no longer the preserve of the West. Most countries in West Africa export to China their raw materials with more or less high added value (e.g. Nigerian oil, Ghanaian, Beninese wood, etc.). Progressively, the terms of the Chinese partnership take on more permanent and more encompassing forms: prospecting, exploitation and first processing on the spot of mining products, as well as transport logistics can be taken over entirely by Chinese companies.
Indeed, the Chinese economy has multiplied its gross domestic product by ten in recent decades. After passing Canada, France, Great Britain and Germany, she is expected to join the United States in the short term. Its influence on the recomposition of the international dynamics in which it intends to play a central role is remarkable.
If the African continent holds a special place in this ambition, it constitutes a fundamental stake. China has become a leading trading partner, a strategic investor, a development and financial partner for most of West Africa’s major current projects, and China is shaking up the balance of power that has developed since independence in the region. This is quite noticeable since the traditional partners, namely, Europe and the United States in the lead are questioning their relations with the region.
Complementarities between Trade, FDI and Aid
China’s sustained economic rise in the past two decades has brought great opportunities to West Africa, but this opportunity has also brought new severe challenges. China’s soaring demand for natural resources has brought considerable benefits to many resource exporting countries in the region. At the same time, China’s growing official development assistance has made it an important non-traditional development partner of SSA countries. In the past five years, the process of trade integration between West Africa and China has accelerated. At present, China’s trade accounts for a high proportion of West Africa’s trade flow. Trade with China an increase export earnings and reduces the prices of consumer goods and capital goods. The trade deficit between West Africa and China is expanding. On the one hand, it is due to the relative price advantage of Chinese products. On the other hand, it is due to the import volume requirements often included in China’s development assistance agreements with West African countries.
West Africa mainly exports natural resources and agricultural products. However, as the productivity growth of the agricultural sector is still very low in the whole region, the proportion of agricultural exports to China’s total exports has declined significantly in the past 10 years. West Africa does not compete with China in third markets such as the United States and the European Union. On the contrary, the exports of West Africa and China are actually becoming more complementary in these markets.
Nevertheless, there is evidence that China is competing with the West African market. Evidence suggests that Chinese imports are putting pressure on producers in West Africa, especially manufacturing. But it is unclear whether Chinese competition is driving West African producers out of the domestic market. Finally, the export of CO produced goods from China and West Africa to the consumer markets of the United States and the European Union is still very small, and is constrained by a combination of geographical and political factors. One of the most critical issues faced by West African policy makers is how to maximize the advantages of their increasingly close financial and trade integration with China.
Given the long-term potential damage of resource exports to macroeconomic growth and competitiveness, West African governments should ensure that a sufficient share of resource income is used for material production and human capital. Some African countries also try to maximize the spillover effect of foreign investment in the natural resources sector through local labor and content requirements, and this experience should be carefully analyzed.