Rethinking the Africa-China Trade: Some Policy Considerations and Implications

Trade between China and Sub-Saharan Africa (SSA) is characterized by China’s importing mining and extraction from SSA and SSA’s importing manufactured goods from China. We perform accounting and simulation exercises to analyze how trade policy and productivity shocks will reduce SSA's dependency on raw material export to China. Scenarios include tariff elimination by China, common external tariff in SSA, and free regional trade in SSA. We also include shifts in labour productivity in SSA’s agriculture and manufacturing sectors and simulate technology spillover from SSA imports from China. Results show that tariff elimination by China increases SSA’s employment and welfare. Raising tariffs on manufactured goods from China reduces welfare and employment by harming consumers and the agriculture sectors dependent on intermediate goods from China. Increase in labour productivity and technical progress in SSA’s manufacturing sectors improve welfare but will not alter the high share of mining and extraction export to China.

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 Record created 2017-04-01, last modified 2018-01-23

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