According to a publication by the Herald, the new 45th United States President Donald Trump’s transition team has been circulating a list of questions on U.S. – Africa relations. At the very top of that list are two important questions:
Ø How does U.S. business compete with other nations in Africa?
Ø Are we losing out to the Chinese?
As to the second question, yes, China is kicking U.S. a$$ in Africa. In fact, it is one country reaping the most out of trade with Africa compared to other nations.
Peter Navarro, the leader of Trump’s National Trade Council, gives his own answer in his book titled, ‘Death by China.’ Navarro writes, “[China’s] million-man army is moving relentlessly across Africa… locking down strategic natural resources, locking up emerging markets, and locking out the United States.”
Navarro concludes that China has an elaborate plan with Africa that will boost factories back in China and seriously undermine the United States manufacturing power.
China’s activities in Africa do not immediately affect the U.S. However, in the long run, it does put China at a strategic advantage over other nations.
China’s Exports to Africa exceeds US Exports by far
One of Trump’s proposals to check China exports into the United States includes imposing a 45% tariff on Chinese imports. This move will likely protect local US companies from what has been perceived cheaper imports into America from China.
However, the U.S. is not the only export destination for Chinese products. Africa is a growing consumer of exports from China. Between the year 2004 and 2009, trade between Africa and China grew at an annual rate of more than 40%.
In 2009, China overtook the U.S. as Africa’s biggest trade partner, a position it has held since then and firmly cemented its relationship with the continent. Since 2009, China’s exports to Africa hit a record $103 billion in 2015, dwarfing U.S. to Africa exports that stood at $27 billion.
China mostly exports manufactured products: electronics, machinery, automobiles, and textiles to Africa. China has acknowledged the rapidly growing middle class in Africa, and the consuming power they are gaining. Although the World Bank places the Africa middle class at 34% of the population in Africa, their combined consumption power is projected to hit $2.2 trillion by the year 2030.
China’s exports into Africa are growing steadily, and should their exports into the U.S. be upset by the Trump administration tariffs. China will not be as hard hit, as it other trade partners such as Africa have growing demand for Chinese products.
“Buy American, Hire America, not China” but Chinese Jobs are now moving to Africa
On his campaign trail, Trump promised to bring back jobs outsourced to China back to the American soil. However, China itself is experiencing an increasing wage rate, and industries are looking elsewhere for affordable labor. Chinese industries are now upgrading from labor-intensive manufacturing systems to more knowledge-intensive and IT-based systems; thereby eliminating low-end manufacturing in China.
Jobs that were once moving from the U.S. to China are not being outsourced to Africa. That means what was once “Made in China” are set to become “Made in Africa.” Take, for instance, Huajian Group, one of the biggest shoemakers in China, opened a factory in Ethiopia back in 2012, and currently, employs over 25,000 locals. The Group is also said to set up a $2 billion investment plan in their plant based in Addis Ababa over the next five years.
Huajian Group which supply shoes for international brands like Tommy Hilfiger, Guess, and even Ivanka Trump’s eponymous shoe line. Now has a supply chain that runs from China, through Africa, and to the United States.
Chinese Managers in China Companies in Africa are doing Skills Transfer
It has been observed that Chinese managers operating China firms in Africa are implementing technical skills training for their local (African) workers. In many instances, 80% of the workforce in Chinese companies based in Africa is made up of locals as the staff. With the ongoing skills transfers from expatriates from China to the locals, coupled with airlifts of the locals to China to undertake further training. China seems genuinely committed to investment in Africa for the long haul.
For more on this, head on to the Herald site.