Role of China in SSA:Trade

Raphael KaplinskyInstitute of Development Studies,Centre for Research in Innovation

Management

Vectors Direct Indirect

Trade

Complementary

Competitive

Production and FDI

Direct Indirect

Complementary

Competitive

Finance

Direct Indirect

Complementary

Competitive

Governance

Direct Indirect

Complementary

Competitive

Migration

Direct Indirect

Complementary

Competitive

A taxonomy for assessing the impact of Asian Drivers on other economies

Vectors Direct Indirect

Trade

Complementary

Competitive

Production and FDI

Direct Indirect

Complementary

Competitive

Finance

Direct Indirect

Complementary

Competitive

Governance

Direct Indirect

Complementary

Competitive

Migration

Direct Indirect

Complementary

Competitive

The impacts may be competitive or complementary

Vectors Direct Indirect

Trade

Complementary

Competitive

Production and FDI

Direct Indirect

Complementary

Competitive

Finance

Direct Indirect

Complementary

Competitive

Governance

Direct Indirect

Complementary

Competitive

Migration

Direct Indirect

Complementary

Competitive

And they may be direct or indirect

Vectors Direct Indirect

Trade

Complementary

Competitive

Production and FDI

Direct Indirect

Complementary

Competitive

Finance

Direct Indirect

Complementary

Competitive

Governance

Direct Indirect

Complementary

Competitive

Migration

Direct Indirect

Complementary

Competitive

We know much more about the direct impacts

Vectors Direct Indirect

Trade

Complementary

Competitive

Production and FDI

Direct Indirect

Complementary

Competitive

Finance

Direct Indirect

Complementary

Competitive

Governance

Direct Indirect

Complementary

Competitive

Migration

Direct Indirect

Complementary

Competitive

From the rich country perspective, we tend to focus on the competitive effects

Vectors Direct Indirect

Trade

Complementary

Competitive

Production and FDI

Direct Indirect

Complementary

Competitive

Finance

Direct Indirect

Complementary

Competitive

Governance

Direct Indirect

Complementary

Competitive

Migration

Direct Indirect

Complementary

Competitive

But in SSA, the complementary impacts are often much more visible

Vectors Direct Indirect

Trade

Complementary

Competitive

Production and FDI

Direct Indirect

Complementary

Competitive

Finance

Direct Indirect

Complementary

Competitive

Governance

Direct Indirect

Complementary

Competitive

Migration

Direct Indirect

Complementary

Competitive

Focusing on the trade vector

Supplier Year Exports ($ '000):

    World USA US share

Kenya 2000 51,527 46,701 90.6%

  2004 305,448 295,520 96.7%

Lesotho 2000 154,192 146,364 94.9%

  2004 494,155 481,787 97.5%

Madagascar 2000 610,683 115,377 18.9%

  2004 559,501 345,728 61.8%

Swaziland 2000 37,712 33,356 88.4%

  2004 190,537 188,467 98.9%

South Africa 2000 453,153 150,313 33.2%

  2004 252,453 149,402 59.2%

SHARE OF C&T EXPORTS DIRECTED TO THE US

CLOTHING AND TEXTILES EXPORTS ARE IMPORTANT

• Lesotho, clothing and textiles accounted for 99% of manufactured exports and 50% of GDP in 2002

• Kenya in 2003, employment in EPZ clothing enterprises accounted for the equivalent of nearly 20 percent of all formal sector manufacturing employment

SSA export value

China exports in equivalent product groups

AGOA -17 58

Lesotho -17 112

Madagascar -14 76

S. Africa -45 65

Swaziland -10 91

Kenya -3 97

CLOTHING AND TEXTILE IMPORTS INTO US ($m) 2005/2004

SSA unit prices China unit prices in equivalent product groups

AGOA -0.9 -45.9

Lesotho -3.2 -46.2

Madagascar -9.5 -44.0

S. Africa 3.0 -33.0

Swaziland -2.7 -51.9

Kenya -1.9 -44.8

CLOTHING AND TEXTILE IMPORTS INTO US UNIT PRICES –2005/2004

Top 10 products

Value of US clothing imports: Jan-April 2006 vs Jan-April 2005

0 20 40 60 80 100 120

S.Africa

Mauritius

Swaziland

AGOA

Madagascar

Lesotho

Kenya

World

Percentage

Actual and projected global share of China’s consumption of base metals

0%

5%

10%

15%

20%

25%

30%

1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010

% o

f to

tal

Copper Alum inium Zinc Nickel Steel Iron Ore (Trade)

SSA EXPORTS

SSA IMPORTS

CHINA IMPORTS

CHINAEXPORTS

SSA GAIN

SSA GAINSSA LOSS

SSA LOSS

Clothingfootwear

Hard commodities

Clothingfootwear

Oil All SSA

SA, Lesotho, Swaziland,

Madagascar,Kenya, Mauritius

Most SSA

Oil exporters, Zambia, SA, DRC, Botswana, Ghana,

Gabon, etc

Policy conclusions

• Changing terms of trade

• Industrial policy– or do we mean innovation policy?

• A level playing field?

• Slow down trade policy reform within SSA

• Look east