Trade of China and India with Africa after the 2008 Financial Crisis.

• Author: Nowak, Wioletta
• Position: COMMENTARY - Essay

Since the beginning of the 21st century, China and India have been intensively developing their trade relations with African countries. Both China-Africa and India-Africa trade relations are win-win relations. However, Sino-Africa trade relations have recently become win-lose relations in favor of China. For China, Africa has steadily become more of an export than an import market. Besides, the expansion of Chinese goods causes the displacement of African products from local markets. Moreover, China has substantially increased its importance as a source of imports for African countries. Several countries in Africa are dependent to China on trade. In contrast to China, India recorded a negative trade balance in merchandise trade with Africa in the years 2008-2017. Compared to Chinese exports, Indian ones destroy fewer African markets. India exports to Africa not only final goods but also components of production. China always dominated over India in merchandise trade with Africa. However, after the 2008 financial crisis, it managed to increase its advantage over India in exports of goods to rich African countries and in imports of goods from resource-abundant Africa's least developed countries. The aim of the paper is to show the trade competition between China and India in Africa over the period from

2008 to 2017. The analysis is based on the data retrieved from the UN Corn-trade Database.

Development of Trade Relations between the Asian Giants and Africa in the 21 st Century

Both China and India have significantly increased their merchandise trade with Africa in the 21 st century. They compete against each other for access to natural resources, food and markets, influence in the region, and support by African countries during voting in different international organizations.

Key dates in the development of China-Africa trade relations include 2000, 2003, 2006, and 2010. At the beginning of this century, China canceled RMB 10 billion of debts that had been accrued by Africa's heavily indebted poor countries and least developed countries (LDCs) and established the Forum on China-Africa Cooperation (FOCAC) at the ministerial conference in Beijing. During the 2 (nd) Ministerial Conference of FOCAC held in 2003, China declared a further increase in development assistance for Africa and zero-tariff treatment to products exported by some African LDCs to China. It also began to build special economic zones in Africa to develop infrastructure, improve customs procedures, and overcome obstacles to investment. (1) In 2006, on the 50th anniversary of establishing formal Sino-African diplomatic ties, China decided to develop a new type of strategic partnership with Africa featuring political equality and mutual trust, win-win economic cooperation and cultural exchange. What's more, the China-Africa Development Fund was set up. At the end of 2006, Chinese leaders announced that the Export-Import Bank of China would provide $2 billion in concessional loans and $3 billion in preferential export credits to African countries over the period from 2007 to 2009. In the years that followed, China has systematically increased its assistance to Africa. During the Ministerial Conferences of FOCAC in 2009 and 2013, China declared it would provide $10 billion in preferential credits to Africa in the years 2010-2012 and a $20 billion line of credit from 2013 to 2015. (2) The main outcome of the 6th Ministerial Conference of FOCAC in 2015 was China's declaration of further assistance in the amount of $60 billion for African countries in the years 2016-2018.

In 2010, China implemented a duty-free, quota-free (DFQF) market access program for the least developed countries. It granted zero-tariff treatment to nearly 60 percent of Chinese total tariffs lines. However, imported goods from LDCs had to satisfy restrictive rules of origin. The rules required goods to originate entirely in the country which exports them or to undergone substantial transformation there. The change of tariff heading or the value of non-originating inputs used in the production of the good must not exceed 60 percent of the value of the final product. (3) Initially the Chinese DFQF program was accessible to Africa's 27 LDCs which had diplomatic relations with China. As of April 2017, 30 African countries have become beneficiaries of the program. (4) The preferential trade from Africa's LDCs mainly consists of imports of non-agricultural primary products such as ores and petroleum. (5)

Generally, competitive political advantage, economic diplomacy, and development assistance have been the building blocks of China-Africa trade and economic cooperation in the 21 st century. China cooperates with African countries despite the fact that they are not democratic and do not respect human rights. Moreover, China does not interfere in the domestic affairs of its partners. The Chinese government diplomatically supports prestige projects in Africa and offers low-interest loans to China's trading partners.

India has been intensively developing its trade relations with African countries since the late 2000s. In 2008, it initiated the India-Africa Forum. The second...