An Empirical Study of China's Trade Potential with Africa.

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In recent years, China has intensified its economic engagement with Africa. Growth of the bilateral trade has, in particular, been dramatic. This trade link is expected to have implications for the development of both economies. How much is the room to further expand china's trade with Africa? This thesis work is a quantified evaluation of the trade potential between china and Africa. Trade complementarities index (TCI) and stochastic frontier gravity model of trade (SFGM) are the methods used for the empirical analysis. Calculations of TCI show that on average, the degree of correspondence between the export pattern of African countries and the import pattern of China is about 63 percent. In addition, estimation results of SFGM suggest that China has realised, on average, only 13 percent of its export potential with African countries. Therefore, the scope to expand the China-Africa trade over the near-to medium term appears to be large. This study recommends that apart from reforming trade policies, both China and Africa should remove other behind-the-border and trade-faci litation constraints in order to actualise their full trade potential.



bilateral trade, trade potential, China and Africa, trade potential