China has removed Tariffs on 98% of products imported from 9 of Africa’s poorest countries. Experts believe the measure will have a little economic impact. However, China’s image may improve.
The new tariff policy, which took effect on September 1, is applicable to mineral and agricultural imports from Chad, Central African Republic (CAR), Eritrea, Djibouti, Mozambique, Guinea, Rwanda, Togo, and Sudan.
A few Asian countries have joined the scheme.
- China has removed Tariffs on 98% of products imported from 9 of Africa’s poorest countries
- Xi stated at the time that the goal was to increase continental imports to US$300 billion (€302 billion) in the next three years, ultimately reaching US$300 billion per year by 2035
- Agriculture and food purchases to China from African countries managed to reach $161 billion in 2020, accounting for 2.6% of total Chinese imports
It comes on the heels of Chinese President Xi Jinping’s declaration at the China-Africa summit held in 2021 that measures would be taken to increase agricultural imports from Africa.
Xi stated at the time that the goal was to increase continental imports to US$300 billion (€302 billion) in the next three years, ultimately reaching US$300 billion per year by 2035.
Africa, which continues to export raw materials to China, accounts for a small portion of China’s imports.
Agriculture and food purchases to China from African countries managed to reach US$161 billion in 2020, accounting for 2.6% of total Chinese imports.
African countries continue to incur debt
According to Mozambican economist Joao Mosca of the NGO Rural Environment Observatory (OMR), the new tariff scheme will have “essentially no effect on Mozambique’s economy.”
He adds that his nation still relies on imported food products and will do so for a long time because it lacks the capacity to export meaningfully.
Mozambique’s main individual creditor and third-largest trading partner are China. However, trade is largely one-way, which harms Mozambique’s cumulative balance of payments. According to Mosca, removing tariff barriers will not help Maputo’s deficits or debt.
However, Beijing is becoming more interested in Mozambique’s commodities. China recently partnered with South Korea on a joint natural gas exploration project in the Rovuma Basin of Cabo Delgado province that is now scheduled to begin production in 2024.
Observers see the August agreement as an indication that China might want to join the global contest for Mozambican gas in full force.
China’s demand for African commodities
“China has become very reliant on African energy and minerals, such as cobalt and coal, which are required for advanced tech,” an African politics expert at Taiwan’s National Chengchi University, said Chenshen Yen,
“I believe such a measure will also assist China in acquiring as many raw materials and will simplify the process for African mineral resources to reach China,” he added.
According to Harry Verhoeven, a senior researcher at Columbia University’s Center on Global Energy Policy, eliminating tariffs on mineral exports from Africa to China will not significantly increase already massive flows from the continent to East Asia.
“In most cases, they will simply lower the cost for Chinese importers to do just that,” he said.
However, Verhoeven sees a potential benefit for impoverished African countries in terms of manufactured goods.
“Some evidence would suggest that China’s tariff reduction has incentivised a diversification of African exports,” he said.
Economic potential in agriculture in Africa
Agriculture betting could benefit both parties in prospective trade relations. After all, China is the world’s largest food importer, and the agricultural sector is the continent’s major employer and driver of economic growth. Africa has 60% of the world’s uncultivated agricultural land.
“From Mozambique to the Horn of Africa, China is focused on reserving territory for agricultural production in the whole African Indian Ocean area,” researcher Mosca said.
China has a legitimate interest in the development of Africa because of its need to feed a growing population, focus on high-tech industries, and desire to expand its market.
China is another possibility
However, according to a report by Mosca, a former Chinese leader reportedly told the prime minister of Mozambique that Beijing “is set on industrialising Africa in the next 100 years.” The expert cautioned that this involves exporting highly polluting industries, for which China is currently constantly under observation.
However, it is important to consider geopolitical positioning in the near term when evaluating the Beijing-announced measures.
This is true, especially in light of the conflicting loyalties that many African states are currently experiencing due to the conflict in Ukraine. According to Mosca, China is attempting to take advantage of this.
China is telling the world that there is a solution to its long-standing dependence on the US and other European nations, the man claimed.