October 31st, 2011 | Xinhua Strengthened China ties might help Africa fend off ripples of Europe’s debt crisis
Strengthening Sino-African economic and trade cooperation will help both sides accelerate economic growth and tackle the multiple effects of the eurozone debt crisis, experts said.
Zhang Jin, a researcher at the Institute of African Studies, Zhejiang Normal University, said in a paper submitted to the China-Africa Think Tank Forum that the eurozone faces its greatest challenge since its founding 11 years ago, as is shown by its stock market slump and the weak euro.
She said African countries that largely depend on European markets are pushing for greater trade with emerging markets — such as China — as the demand from European countries continues to shrink.
Official statistics show that the Europe Union (EU) is Africa’s largest trade partner, with bilateral trade volume reaching 315.2 billion U.S. dollars in 2006. Additionally, Europe is the largest donor to Africa, offering 51.3 billion U.S. dollars in 2006. The EU also imports 36 percent of all the oil Africa exports.
However, the eurozone’s nearly two-year-old sovereign debt crisis, which was first limited to Greece and then spread across borders, is still worsening, leading to the region’s slumping foreign investment and falling trade with Africa.
As the debt crisis increasingly weighs down prospects of European economies and adds to global uncertainties, Europe’s headache is expected to dominate the upcoming G20 summit in southern France on Nov. 3.
The eurozone woes not only result in weaker economies in many developed countries but also trigger higher inflation rates in Africa. Devaluation of the U.S. dollar and the euro would bring multiple effects to African countries as the dollar constitutes a major part of their foreign exchange reserves, Zhang said.
“Immature African markets that rely on exporting primary products are most vulnerable in the unstable world economy. Strengthening cooperation with China might help Africa fend off economic risks,” Zhang said.
Official data shows Sino-African economic cooperation has been developing rapidly in recent years. Bilateral trade exceeded 100 billion yuan (15.7 billion U.S. dollars) in 2008, and has since increased 30 percent annually. According to Wei Jianguo, former vice minister of commerce, Sino-African trade will reach 300 billion yuan, catching up or even surpassing the US-Africa or EU-Africa trade volume.
The 2008 financial crisis only had a limited impact on the African economy, partly thanks to the rapidly growing trade and investment from China, India, and other emerging markets, Zhang said.