The Chinese economy is undergoing unprecedented economic disruption due to the ongoing COVID-19 crisis and African countries are largely unprepared for the impact that it’s going to have on their economies. The prices of most major commodities oil, timber, copper that sustain many African economies are all down significantly as Chinese demand has plummeted in recent weeks. And with the outbreak still not under control, there’s no indication things are going to improve any time soon.
While the drop in trade with China due to the contagion is now being felt in many African economic sectors, the fact is that a lot of the changes that are now taking place in China-Africa trade were already well-underway even before this health crisis emerged.
China simply doesn’t manufacture anywhere near as much as it did 5 or 10 years ago as the economy has become more focused on technology and services. A growing amount of that industrial output that defined China’s early stage of economic development has been offshored to lesser developed countries in Southeast Asia and elsewhere.
But the problem in Africa is that policymakers across the continent still think of China as a place to sell raw materials, buy the finished goods and then tap Chinese credit for affordable development financing. All three of those categories are no longer as relevant as they were in the past, but that message doesn’t seem to be getting through to decision-makers in most African capitals.
“I don’t think African [leaders] are particularly well-prepared for what is a fundamental change in the way China’s economy attaches itself to the rest of the world,” said Jeremy Stevens, Standard Bank Group’s Chief China Economist. “There’s a widespread “lack of understanding [in Africa] as to what’s really driving China’s economy,” he added.
Jeremy joins Eric & Cobus to talk about how the Novel Coronavirus outbreak is impacting the Chinese economy and why these changes present enormous risks for African economic stability.
- Inside China Newsletter: Email Jeremy at Jeremy.Stevens@standardsbg.com to sign up for his excellent Inside China newsletter that features insightful analysis on the latest Chinese economic trends.
- The Financial Times: African growth set to suffer as coronavirus outbreak cuts demand
- CNBC.com: The coronavirus fallout is ‘battering’ African economies, Capital Economics says by Elliot Smith
About Jeremy Stevens:
Jeremy Stevens is Chief China Economist at Standard Bank, based in Beijing. His research gives special attention to the Chinese economy, and how the shift towards a multipolar world is re‐calibrating Africa’s external and internal dynamics. His papers have been presented at the FOCAC Summits (Egypt in 2009 and Beijing 2012), the AfDB, ADB, OECD, IMF, WB, and a host of other regional and local gatherings and conferences. He advises Standard Bank’s clients and African central banks, policymakers, and corporates on developments in the Chinese economy and financial markets.
In addition, he works with Chinese corporates, policy banks, and think tanks on opportunities in Africa. Stevens frequently comments across a host of international media forums, including Bloomberg, CNBC, The Economist, The Financial Times, Reuters, and The Wall Street Journal. He also regularly contributes to China’s domestic media, including CCTV, China Daily, Caijing, China Securities Journal, and elsewhere. Stevens writes the weekly Inside China newsletter, which features a mix of insights, data, and analysis on the Chinese economy.