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Trade between China and Africa dropped 14% in the first quarter and could get worse

Reuters/Ed Cropley
Angola’s state oil firm Sonangol is a major exporter to China

Trade between China and Africa fell by 14% to $41 billion in the first three months of 2020 compared to the same period in 2019, according to figures from China’s General Administration of Customs.

Much of China was on lockdown during the first quarter of the year after a spike in coronavirus cases caused an unusually extended Lunar New Year holiday as authorities scrambled to slow down the spread. The Chinese economy shrunk by 6.8% in this period.

With factories closed, manufacturing output reduced significantly in February across the country because of Covid-19, decreasing Africa-bound exports from China by 10.5%. China is Africa’s largest trading partner and in the first quarter of 2020, China-bound exports from Africa also slowed by 17.5%. The figures were published in the South China Morning Post.

China-Africa bilateral trade has been steadily increasing for the past 16 years, according to Johns Hopkins University’s China Africa Research Initiative, reaching $185 billion in 2018, up from $155 billion in 2017.

While China started to come out of the worst of the coronavirus at the end of the first quarter, many African countries began the second quarter of 2020 in lockdowns and curfews which will likely hold for a few more weeks.  With airports and borders across the continent shut coupled with low domestic spending during lockdown, the second quarter will likely follow the downward trend in trade volumes not only with China but with the rest of Africa’s trading partners. 

Africa now has over 25,000 confirmed coronavirus cases and governments are using restrictions on movement and gatherings as the central measure to stall the spread of the virus and prevent an overwhelming of already weak health systems. 

Africa’s two largest economies, Nigeria and South Africa have imposed lockdowns with the latter deploying the army to enforce one of the world’s strictest coronavirus-era restrictions. 

Since its creation by China in 2013, the large scale infrastructure and connectivity project Belt and Road Initiative has expanded trade links to China. It has also helped to diversify the China-Africa commerce relationship to include telecommunications and machinery.

However, raw natural resources such as oil, copper and iron still dominate the trading relationship. 

Not only has the coronavirus caused the price of commodities to drop to all-time lows, but the slowdown in demand from China would also especially affect countries that rely heavily on the world’s second-largest economy as their main buyer. They include major oil exporters such as Angola and South Sudan—the latter which exports 95% of its resources to China. 

“Different African countries have varied trade relationships with China. But the response to Covid-19 must be the same – to “upgrade” trade relationships with China,” says Hannah Ryder, CEO of Beijing-based Development Reimagined.

China-Africa trade is heavily imbalanced with a large deficit and the coronavirus should force African countries to rework the nature of the relationship by adding value to their exports and using Chinese expertise to open more factories on the continent, says Ryder. “That’s the only way African countries will become more resilient to trade shocks, as well as meet [their] own goals for job creation and growth.”

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