An Empirical Study of China's Trade Potential with Africa.
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Date
2010-06
Authors
Assefa, Matias
Journal Title
Journal ISSN
Volume Title
Publisher
A.A.U
Abstract
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.
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Keywords
bilateral trade, trade potential, China and Africa, trade potential