A Comment on South to South
Trade Development
Xingmin Yin, China Center for Economic Studies
Fudan University, Shanghai, China
International Conference on Linkages between Trade,
Development & Poverty Reduction
Civil Society Organization & Aid for Trade:
Roles & Realities
Nairobi, Kenya, 15-16 March 2007
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1. LDCs and the Doha Development Round
2. LDC export profile and implications
3. Discussion on opportunities for LDCs:
Case of China-Africa trade development
4. Aid for Trade: new practice
5. Suggestions for South-South trade
capacity building
2
1. LDCs and the Doha Development Round
 The Doha Development Agenda (DDA) is aimed
at better integrating developing countries,
especially least developed countries (LDCs), in
the multilateral trading system.
 By many accounts, LDCs face great challenges
under the current system of trade rules.
 LDCs need debt relief, aid, and trade to help
them to alleviate poverty and achieve
sustainable development.
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A Comment on Ministerial Declaration
Adopted on 18 December 2005, HK
 Aid for Trade should aim to help developing
countries, particular LDCs, to build the supplyside capacity and trade-related infrastructure
that they need to assist them to implement
and benefit from WTO Agreement and more
broadly to expand their trade.
 Aid for Trade cannot be a substitute for the
development benefits that will result from a
successful conclusion to the DDA, particularly
on market access. However, it can be valuable
complement to the DDA.
4
What Steps for the Doha Round?
 The Doha Round should bring tangible benefits
to LDCs in terms of enhanced opportunities for
trade and business.
 Key players in the Doha Round should start
taking LDC demands seriously.
 No doubt, the action is better than discussion
for multilateral trade development.
5
2. LDC Export Profile and implications
 Much has been made of the low share of LDCs in world
trade. LDCs as a group accounted for only 0.6 per cent
of world exports and 0.8 per cent of world imports.
 In terms of market concentration, the EU (15) and the
United States absorb the majority of LDC exports. In
1995 their share was almost 60 per cent. By 2004 this
figure had dropped to 52 per cent, but the dramatic
increase in LDC exports to China has resulted in the top
three markets (China: 17.8%, EU: 29.2% and US:
22.7%) accounting for 69 per cent of total exports.
6
Share of Major Markets in LDCs
Merchandise Exports, 1995-2004
45
40
35
30
25
20
15
10
5
0
95
96
97
98
EU
99
US
2000
China
2001
2002
2003
2004
Japan
7
Market Access Issues:
Duty-free and Quota-free
 Achieving duty-free and quota-free market
access in developed country markets for all
products originating from LDCs has been
aspiration of the international community for
some time.
 According to WTO, Japan and the United States
maintain positive duties on a significant share
of LDC exports in contrast to other developed
countries.
 An interesting trend is the growing importance
of developing countries, such as China, as
markets for LDC products.
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The Case of China
 In September 2005, China announced new
measures in favor of LDCs. The estimated
impact of these measures is to increase the
total duty-free figure from 93.3 per cent to
95.2 per cent, and non-oil figures rises from
48.4 per cent to 62.3 per cent.
 ……
 International debate on China’s trade policy to
Africa
9
3. Discussion on Opportunities for LDCs:
China-African Trade Development
 China has become the third largest trading
partner for Africa after the EU and the United
States in 2005, and will be the second after the
EU, at least, before the end of 2008.
 The value of African trade to China in terms of
the US dollar has more than tripled in both
directions since 2002 and that China’s imports
from Africa exceed its exports to Africa.
 China has hoped to expand the trade with
African countries to US$ 100 billion by 2010
more than double the 2005 year level of US$
40 billion.
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3.1 China-African Trade Growth
US$ Million
25000
20000
15000
10000
5000
0
2000
2001
2002
Imports
2003
2004
2005
Exports
11
New Trends
 Sino-African trade amounted to nearly US$ 40
billion in 2005, up 35 per cent from the
previous year. Fifteen years ago, bilateral trade
was only US$ 1.66 billion.
 Structure of trade: The product structure of
Africa’s merchandise exports has always been
strongly affected by price development.
 China’s major trading partners in Africa can be
calculated by country.
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Top Import Partners of China in Africa,
2001-2005, US$ million
Rank Partners
2001
2005
2001-05
722
6582
15314
1173
3442
10685
1
Angola
2
South Africa
3
Sudan
938
2614
7858
4
Congo
181
2278
5094
5
Eq. Guinea
509
1438
3739
6
Gabon
259
352
1544
7
Libya
54
942
1455
8
Nigeria
227
527
1410
13
 China main import partners are African oilproducing countries except South Africa.
 China’s imports of agricultural goods and
manufacturing products accounted for 8.1 per
cent and 6.9 per cent of total imports in 2005
respectively.
 Is it possible to change the structure of trade
between China and Africa? How to change?
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Top Export Partners of China in Africa
2001-05, US$ million
Rank
Partners
2001
2005
2001-2005
1
South Africa
1014
3826
10870
2
Nigeria
549
2303
7274
3
Egypt
805
1934
5937
4
Algeria
173
1404
3426
5
Morocco
278
1206
3423
6
Sudan
158
1294
2966
7
Benin
370
953
2891
8
Ghana
106
672
1756
9
Togo
80
538
1389
10
Kenya
133
457
1320
15
 In terms of export accumulation, South
Africa has remained the first rank of
China’s exports to Africa during the
2001-2005 period.
 Nigeria, which had imported not so
many goods from China, moved to the
second position, next only to South
Africa, in 2004 and 2005.
 ……
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3.2 Geographical Distribution of African Trade
 Africa’s merchandise exports are largely
destined to Europe, but Europe’s share has
decreased markedly in recent years from onehalf in 2001 to about 43 per cent in 2005.
 Africa’s exports to Asia are estimated to have
increased by 20 per cent with shipments to
China rising by more than one-third.
17
African Exports to Major Partners
US$ million
70000
60000
50000
40000
30000
20000
10000
0
2001
2003
2002
China
EU
US
2004
2005
Japan
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Geographical Features of African Trade
 The EU-Africa trade: the ratio of four North African
countries (Algeria, Tunisia, Morocco and Egypt) exports
to the EU accounted for 58.58 per cent; another major
trading partner is South Africa, which accounted for
nearly 24 per cent of Africa’s exports to the EU in 2004.
 The United State imports from Africa are highly
concentrated in Algeria (46.87%) and South Africa (29%)
in 2004.
 It seems hardly possible to apply this trade model since
most African countries have a very limited access to the
market of developed countries.
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Growth Rates of African Exports to
Major Partners
Year
China
%
US
%
EU
%
Japan
2001
4793
-14 15372
2002
5427
13 14406
-6
48244
6
2805
24
2003
8360
54 20088
39 58826
22
4965
77
2004
15646
87 16168
-20 60161
2
4963
~
2005
21100
35
5786
17
45721
%
2265
Unit: US$ Million.
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3.3 China-Africa Trade in Regards to
Regional Distribution
 China’s major import partners are Asian
countries (66.9 per cent) in 2005.
 The ratio of China’s imports from Africa
increased from 1.84 per cent in 2002 to 3.19
per cent in 2005, by increasing 70 per cent.
 North America and Europe accounted for 8.51
per cent and 14.61 per cent of China’s total
imports, by decreasing 3 percentage points
and 4 percentage points within 2000-2005
period, respectively.
 ……
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Export Partners of African LDCs,
2001-05, US$ million
LDCs
GNI p.c.
Population
Benin
380
644
Kenya
350
Sudan
China
EU
US
335
119a
n.a
3074
55
2406b
149
340
3169
10685
716
n.a
Zambia
320
1028
553
2149
59
Ghana
300
1971
277
n.a
n.a
Nigeria
290
12691
1410
n.a
n.a
Togo
270
465
107
243
n.a
Uganda
260
2279
42
775
52
Madagascar
260
1598
55
n.a
n.a
Burkina Faso
200
1155
320
n.a
n.a
a: no data of 2002; b: no data of 2005. GNI: Gross national income.
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Discussion
 Demand side: there is no strong evidence of
the regional diversification for the developed
country trade with African countries.
 Supply side: many African countries remain
highly dependent on the export of a small
number of agricultural raw materials or
commodities.
 What is the choice for African countries?
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4. Aid for Trade: New Practice
 China would further open up its market to
Africa by increasing the number of tariff-free
products from 190 to 440.
 China will establish five export-processing
zones in Africa, and may expand these zones
to more African countries.
 What are implications of Chinese model of
export-orientation to Africa?
 What kinds of policy of Aid for Trade will be
taken by China in the coming decades?
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China’s Direct Investment in Africa
Country
2004
2005
Accumulation at
the end of 2005
%
Algeria
11.2
84.9
171.2
10.73
Sudan
146.7
91.1
351.5
22.04
Guinea
14.4
16.3
44.2
2.77
Madagascar
13.6
0.14
49.9
3.13
Nigeria
45.5
53.3
94.1
5.90
South Africa
17.8
47.5
112.3
7.04
317.4
391.7
1595.3
100.0
Africa
Unit: US$ million.
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Areas for China’s Direct Investment




Mining
Commercial agricultural and agro-processing
Textile and garments manufacturing, and
Infrastructure development
 More areas should be considered for China’s
direct investment in African countries……
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5. Suggestions for South-to-South
Trade Capacity Building
 Economic growth: the gains from economic
growth are much larger, whether as importer
or exporter, and the gains as an exporter are
dramatic.
 The changes of development strategy from
import-substitution to export-orientation for
developing countries are urgently needed.
 The importance of industry policy for LDCs……
 Special treatment for LDCs is required.
 ……
27
GDP and Trade Development in Africa, China,
2000-05
2000-05
GDP growth rate
2001 2002 2003 2004 2005
4.0
3.4
3.2
4.1
4.6
4.7
Exports
15
-7
3
25
30
29
Imports
14
4
1
20
29
19
Exports
20
15
46
36
36
Imports
-14
13
56
86
35
8.3
9.1
10
Merchandise
China-Africa
GDP growth rate
9.5
10.1 10.2
Unit: Annual percentage changes.
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 How to build LDC capacity for exports under the Doha
Development Round?
 In contrary to Africa, Asia’s merchandise exports and
imports expanded by 9.5 per cent and 7.5 per cent
respectively. Asia’s trade developments and
predominantly shaped by the performance of emerging
economies: China ……
 From the standpoint of balance of payments concerns,
for LDCs, economic growth will translate into more
exports than imports—with a significant part of gains
resulting from the increased exports to emerging
markets such as China, India ……
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Thanks!
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