The “marriage of convenience” between China and Africa is coming under increased pressure as trade relations remain skewed in favour of the Eastern giant.
“The continent as a whole maintains a trade deficit with China, while export dependency levels have increased, especially for oil and metals,” said Ruben Nizard, economist for sub-Saharan Africa in the Coface economic research department.
“This may be problematic as it could lead to “Dutch disease”, a mechanism by which increases in revenues from natural resources make an economy’s currency stronger, resulting in the nation’s other exports becoming more expensive and imports becoming cheaper. The consequences include a less competitive manufacturing sector and increased exposure to commodity price volatility.”