The growing relationship between China and Sub-Saharan Africa: Macroeconomic, trade, investment, and aid links

Abstract

China's economic ascendance over the past two decades has generated ripple effects in the world economy. Its search for natural resources to satisfy the demands of industrialization has led it to Sub-Saharan Africa. Trade between China and Africa in 2006 totaled more than 50 billion, with Chinese companies importing oil from Angola and Sudan, timber from Central Africa, and copper from Zambia. Demand from China has contributed to an upward swing in prices, particularly for oil and metals from Africa, and has given a boost to real GDP in Sub-Saharan Africa. Chinese aid and investment in infrastructure are bringing desperately needed capital to the continent. At the same time, however, strong Chinese demand for oil is contributing to an increase in the import bill for many oil-importing Sub-Saharan African countries, and its exports of low-cost textiles, while benefiting African consumers, is threatening to displace local production. China poses a challenge to good governance and macroeconomic management in Africa because of the potential Dutch disease implications of commodity booms. China presents both an opportunity for Africa to reduce its marginalization from the global economy and a challenge for it to effectively harness the influx of resources to promote poverty-reducing economic development at home. © The Author 2007. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development/The World Bank. All rights reserved. For permissions, please e-mail: journals.permissions@oxfordjournals.org.