Evaluating China’s new tariff-free policy for 6 Africa countries

Experts have said China’s latest tariff-free policy for additional African countries may be a catalyst for new opportunities amid criticisms about the trade imbalance and concerns over Nigeria’s position on such economic programmes. The Chinese government had on December 25, 2023, announced tariff-free access for goods to Angola, Gambia, Congo, Madagascar, Mali and Mauritania on […]

Experts have said China’s latest tariff-free policy for additional African countries may be a catalyst for new opportunities amid criticisms about the trade imbalance and concerns over Nigeria’s position on such economic programmes.

The Chinese government had on December 25, 2023, announced tariff-free access for goods to Angola, Gambia, Congo, Madagascar, Mali and Mauritania on 98 per cent of taxable products.

The Customs and Tariff Commission of the State Council announced that the policy, which would shore up agricultural exports to China, symbolised the “spirit of China-Africa friendship and cooperation and facilitated “a high-quality China-Africa community with a shared future.”

This brought the number of African countries on the zero-tariff policy to 27, as Beijing had earlier announced similar cuts for 21 other African countries including Ethiopia, Niger, Benin, Mozambique, Sudan, Burkina Faso, Guinea Bissau, Sao Tome and Principe, Tanzania, Uganda, Zambia, Rwanda, Togo, and Djibouti.

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President Xi Jinping introduced the tariff cuts in 2021 during the Forum on China-Africa Cooperation (FOCAC) summit in Dakar, Senegal, where he promised “green lanes” for African agricultural exports to China to expand the range of products covered by zero-tariff treatment and speed up border processing.

According to President Xi, China aims to import products worth $30bn from Africa by the end of 2024 and $300bn by 2035, which will be a major economic boost for countries considered the least developed.

Data from China’s General Administration of Customs revealed that trade between China and Africa reached $234.8bn in the first 10 months of 2023, while imports to China accounted for $91.5bn of this sum, compared with the same period in 2022, an over 10 per cent increase.

Despite the announcement in 2021, China still maintained a trade surplus with its exports to Africa dominated by finished goods such as textile, machinery and electronics. The latest policy, which covers 8,000 different tariff lines, is expected to help bridge the existing gap in the balance of trade.

Experts believe that the policy will go a long way for Africa, which has the paradox of being both a resource-rich continent and arguably the poorest continent on the earth. For instance, the Democratic Republic of Congo (DRC) is the source of 60 per cent of China’s cobalt imports, Zambia has copper, South Africa has iron ore, Angola is a major exporter of petroleum and diamond, Ghana is rich in gold and bauxite while Nigeria is rich in gas, to mention but a few.

Analysts believe this policy mirrors the Africa Growth and Opportunity Act (AGOA) announced in 2000 by the Bill Clinton administration in the United States to help Africa shore up its productive capacity and revenues.

The programme provides eligible Sub-Saharan African countries with duty-free access to the US market for over 1,800 that are eligible, in addition to 5,000 products that are eligible for duty-free access under the Generalised System of Preferences.

Although experts bemoan Nigeria’s failure to leverage on the benefits AGOA, said to have rigorous eligibility requirements, at least 34 African countries are presently participating in the programme.

Reacting to the latest China trade policy, a Portuguese African affairs expert, Teresa Nogueira Pinto, said the move showed that contrary to the thinking of post-COVID that China was retreating from Africa, the continent remained central to its long-term strategy as reflected in the Global Development Initiative according to which its “economic and political model of state capitalism and authoritarianism represents the road toward prosperity.”

 

Pinto said the outcome of the 2021 FOCAC confirmed that “after commodities and infrastructure, Sino-African relations are now focused on other types of trade and soft power.”

 She further said China became Africa’s largest trading partner with a volume of $254bn in 2021, and like infrastructure under the Belt and Road Initiative (BRI), was increasing its information and communications technology footprint with the Digital Silk Road (DSR) initiative with African countries such as Egypt, Algeria, Kenya, Nigeria and South Africa as the key hubs.

She added that China’s shift from government to regional financial institutions and private companies in a cautious approach to financing and concerns over displacement of the local manufacturing sector in many countries like South Africa and Nigeria posed a major challenge to Sino-Africa cooperation.

 Similarly, the director of an Abuja-based think tank, Charles Onunaiju, said the policy coming as an addition to the existing 21 African countries in the programme was an embodiment of the China-Africa relations and a move to strengthen Africa’s fragile economies.

 “It is a concrete aspect of the cooperation and will help Africa to develop its production capacity,” he said, adding, “It is a milestone in the relations and an opportunity for diversification of the African economy.”

 In his reaction, a Professor of political science in the Nasarawa State University, Keffi, Jideofor Adibe, said it was similar to AGOA, which introduced, as in World Trade Organisation (WTO) rules to put trade barriers along with non-tariff measures as a quality control.

 He said, ‘In principle, it is a political statement which could be used to leverage some of the favoured countries that would benefit countries intended for the concessions.

“If you read about AGOA, you see why countries like Nigeria are not able to take advantage of the AGOA unlike South Africa and some other African countries.”

Dr Olalekan Babatunde of the National Institute for Peace and Conflict Studies said the latest policy was a welcome development for Africa even though many African countries failed to take advantage of AGOA as China’s economy was bouncing back from COVID-19.

 “Each country is pursuing their national interest; you can’t vilify China or any country for pursuing their interest. You have to look at each policy and take the opportunity for your own national interest,” he said.

Olalekan said whatever opportunities from China to developing countries should be taken seriously and try to take advantage of it.

“We must understand why China grew to become the second-largest economy in the world.

“If you look at the trade balance, you see that China is  doing more than these African countries, so why can’t we borrow a leaf to also do more to earn foreign exchange.”