Friday, September 18, 2015 09:34AM / FBN Capital Research
A slowdown of the Chinese economy is now largely taken for granted by the markets and the authorities’ target of 7.0% growth in 2015 viewed as ambitious. One consequence of a slowdown would normally be pressure on import demand so today we show a chart with the exports of six African countries to China.
At one extreme, almost half Angolan exports in 2014 were dispatched to China, which can be explained in good measure by Chinese investment in the offshore oil province. At the other, exports from Zimbabwe, widely seen as a client state, to China in 2013 were negligible. (We might speculate that transactions in the opaque Zimbabwean diamond industry were excluded from the trade data.)
The share of 1.6% for Nigeria is not a huge surprise. Nigeria exports very little other than oil, and China is a marginal oil export market.
For some African countries such as Angola, Gabon and Zambia, another likely negative consequence of a Chinese slowdown would be a decline in its spending on their national infrastructure.
In Nigeria’s case FGN borrowing from China amounted to just US$1.39bn at end-June or just 13% of its external debt stock. There are some grounds for concern in that the new administration is said to be looking to China and other sources for soft loans to overhaul the neglected infrastructure.
Nigeria’s own slowdown can be traced to its failure to diversify its economy and build fiscal buffers, among other policy shortcomings. Declining demand from developed countries has been significant, but that from China much less so.