Published By : 05 Oct 2015 | Published By : QYRESEARCH
African nations that have been supplying copper, oil, bauxite, and iron ore to suffice China’s raw material demands seem to have suddenly woken from slumber. Growth in China is slowing, hence the country is directing its effort to shift to a consumer-driven model, which inevitably depends less on raw materials obtained from Africa. As a result of the recent developments, the commodity prices plummeting, increasing the manufacturing woes for the country. Moreover, with some of the international investors, startled by the prospects of rising interest rates in the U.S., have inadvertently lost their appetite for emerging markets, which is likely to further worsen conditions.
An Oxford economist, Paul Collier said in one of his recent interviews that while past decade has been benevolent for Africa, the region needs some serious brainstorming to sustain its position as a raw materials supplier in the global scenario. In the last 10 years, ending in 2014, trade relations between China and Africa increased by 20-fold to reach over US$200 bn.
The combination of high revenue and low debt enabled African governments to leverage capital markets. There were also a few cases of funding the discovery of several services of minerals and hydrocarbons. This therefore, was the biggest opportunity that Africa ever witnessed, however many says this as a missed opportunity.
African countries that did not capitalize on the benefits of good times by diversifying their resources or for that matter building strong economic buffers are now likely to feel the pressure of slowdown in the Chinese manufacturing sector, said Mr. Collier.
However, this shouldn’t be highlighted as the end of Chinese-African relationship, in fact economists suggest that it is a farfetched potential. China’s economy may be witnessing decline in growth but it is not likely to halt any time soon. Even if the country registered 5 per cent growth it would come at par with a reasonably sized economy, hence implying steady, albeit moderate demand from the Chinese manufacturing sector for African raw materials.