During the most recent ‘Geek Week’ (11-15 April 2016), participants worked on a number of research projects. This note is based on a tralac Working Paper of the same name prepared during the week by Ron Sandrey, Emmanuel Igbinoba, Rodney Hoaeb and Tebogo Mojafi.

At the beginning of this century, a time that seems much further away than when expressed as 2001, Africa was the source of just under 2% of Chinese global imports. By 2012 this has risen to just over 6%, and it stayed there for the next two years. This trade was fuelled by, well, fuels. But, during 2015 the % share of African imports in the Chinese market had declined to 4.19% from the previous 2014 share of 5.91%. What drove this decline?

Through the earlier years of this period (and even the decade before this) a well-known feature of the global economy was the spectacular and unrelenting growth of the Chinese economy with constant annual GDP growth rates of around 10% or above. This in turn feed into an increase in global commodity prices as the Chinese GDP growth meant its appetite for the world’s raw materials increased. These commodity prices rose from 2001 through to around mid-2011 (albeit with a decline in 2009 due to the global economic collapse) whereby the global commodity index was around five times its 2001 level at the peak. These prices in general started retreating from this mid-2011 period, with the crude oil price in particular falling dramatically from mid to late 2014, a period that ran concurrently with the Chinese GDP decline.

This note examines the Chinese imports from Africa during 2015 and assesses the extent to which falling global commodity prices have contributed to changes over more recent import values, and in particular from the 2014 values. There is an undoubted relationship between the falling commodity prices and the slowdown in the Chinese GDP growth over the most recent period, but this note (and the fuller paper) just examine the trade data as assessed by Chines import data in the absence of timely and reliable African export data. Similarly this is not an attempt to examine the impacts of falling global commodity prices on African exporters and their trade and economic profiles more widely, but restricts analysis to Chinese imports from Africa.

The 2015 decline in Chinese imports from Africa of 39% was significantly greater than the 14% decline in Chinese global imports. This meant that the African share of the Chinese global imports declined during 2015 as discussed above.

South Africa has consistently been the main African supplier into China, with a share of around 40 % of the African imports in recent years. Combined with imports from Angola of around 25 % this means that around two-thirds of the total have consistently been from the two main sources. Next in order for 2015 were Sudan (both North and South combined), Democratic Republic of the Congo (DRC), Congo itself and Zambia. These countries are followed by a further ten with 2015 shares of between one and two percent of the total[1] and the top twenty are rounded of by Ethiopia and Tanzania with 0.54 % of the Chinese imports each. Using the aggregate decline of 39 % (an Index value of 61 where 2014 = 100) we find that 11 countries had less severe declines than the benchmark, and this included the 32 % decline from South Africa. Both Angola and Sudan had declines of around one half, and all the countries in the top 10 experienced declines in their imports into China. Only the lesser sources of Libya, Cameroon and Morocco actually increased their imports during 2015, but Libya was still significantly below its values of $ 6.5 billion for 2012 that put it into third place as a Chinese source from Africa that year  

At the commodity (HS 4) level crude oil, with imports of $ 26 billion or 37 % of the total, was the main import during 2015. This value was just 51 % of the 2014 value, and Africa lost market share in China as it slipped to 19.6 % from previous shares of shares from 22.4 % in 2014 to 24.4 % in 2012. The next main import at this level was a classification called “commodities not elsewhere specified” (nes). This unusual classification is used as a “catch all” by several countries to in part disguise their trade. It is significant for Chinese imports from Africa, and during 2015 represented 21 % of the total value. These imports may well be gold imports from mainly South Africa with possible Hong Kong transhipments from possibly Switzerland also involved. To further complicate trade data analysis South African does not report gold exports. The next six main imports were loose diamonds, iron ores, platinum, ferro-alloys, and the two separate classifications of refined and unrefined copper.

We examined the profile of commodities by the major sources, and here we introduced the index of average unit prices. This, when set alongside the index of import monetary values, allows for a meaningful profile of both import values and average unit prices to give a proxy for the import quantities. If the indexed unit price falls by more than the indexed total value there has been an increase in quantity to compensate the falling prices. Conversely, should the overall values decline by more than the unit price then quantity has declined. For the all-important crude oil the 2015 average unit values were generally just over half of that for 2014, and the major suppliers of crude were Angola, Sudan, Congo, Libya, Ghana and Equatorial Guinea. Libya has been an inconsistent supplier over the last five years, as has Equatorial Guinea to a lesser extent.

Diamonds (mostly from South Africa) were difficult to assess as unit values were not reported, and similarly the commodities nes are again almost exclusively from South Africa but some from Ghana as limited data is available. Iron ore imports are mostly from South Africa and Mauritania; platinum is exclusively from South Africa; ferro-alloy is predominantly from South Africa with a minor contribution from Zimbabwe; and both refined and unrefined copper are mostly from DRC and Zambia with modest contributions from South Africa. Logs are more diversely sourced, with contributions from Nigeria, Mozambique, Cameroon, Equatorial Guinea and Congo; chromium ores are almost all from South Africa; manganese is from South Africa and Gabon; oil seeds are from Ethiopia, Togo, Tanzania, Sudan and Niger; petroleum gasses are from Nigeria and Algeria; cobalt is mostly from DRC; and the final entry of tobacco is mostly from Zimbabwe but some from Zambia.

In conclusion we looked at the country/commodity profile and found that South Africa has a diverse portfolio with the major imports into China being commodities nes, diamonds, iron ores, platinum, ferro-alloys, chromium and manganese. The imports from Angola, Sudan, Congo, Libya and Algeria are effectively all petroleum products. Most of the trade from DRC is copper and cobalt, while from Zambia it is virtually all copper. Trade from Ghana, Nigeria, Equatorial Guinea, Egypt and Cameroon is mostly petroleum products, but Ghana features in the commodities nes trade, Nigeria and Equatorial Guinea in logs, Egypt has some marble and Cameroon has logs, timber and cotton. Gabon’s trade of $ 1.1 billion again has crude oil as the main contribution but also manganese and timber. Imports from Zimbabwe are mostly tobacco, Mauritania iron ore and copper ore, and Morocco is unusual in that it is like South Africa in having some manufacturing products. Mozambique is about logs and oil seeds, Ethiopia is dominated by oil seeds and lastly Tanzania profiles oil seeds, other precious metals and copper.  

Overall we can say that the Chinese imports from Africa during 2015 were dominated by the two source countries of South Africa and Angola with some 65 % of the imports between them and the two commodities of crude oil and the mystical commodities nes (possibly gold) with an import share of 58.5 %. Most of the other commodities were similarly prized from below the earth’s surface, while the three remaining (logs, oil seeds and tobacco) were grown on the earth’s surface. There are no manufacturing products in the conventional sense of note in China’s main imports from Africa. By value the imports were down by 39 %, and as this decline was greater than the decline in Chinese global imports Africa lost significant market share. Driving this change was a fall in average unit prices across all of the major imports.

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[1] These ten include Nigeria. While this country has both the largest GDP in Africa and the largest exports from Africa it exports little to China but rather mostly petroleum products to the US and EU.