Can China’s Covid lockdowns help Africa?

Date:

Can China's Covid lockdowns help Africa?

  • news by AUN News correspondent
  • Monday, November 28, 2022
  • AUN News – ISSN: 2949-8090

Summary:

  • Till Ole Barrelet, CEO of Emirates Shipping Line, said that China’s efforts to eradicate COVID, which include regional lockdowns and obligatory quarantines for visitors from other countries, are one of several threats to the international shipping industry.

  • He says that factories and the supply side are having a lot of trouble in China.

  • In 2016, China’s total financing to Africa reached $29.5 billion.

  • Supply-chain possibilityAfrica has the ability to step up and increase its industrial capacity and productivity as a result of China’s self-imposed isolation from global supply chains.

  • What better way to start a positive feedback loop than for African businesses to step up and produce more of the essential items that the continent needs now that China is pulling back from global supply chains? China will continue to be a significant producer for a very long time, so it is unlikely to happen rapidly.

As we have previously reported, the CEO of one of the largest container carriers in the Middle East thinks that China’s stringent COVID-19 policy is hurting China’s position in the world economy.

Till Ole Barrelet, the CEO of Emirates Shipping Line, said that China’s efforts to get rid of COVID, which include locking down parts of the country and making visitors from other countries stay in quarantine, are one of many things that threaten the international shipping industry. He was speaking at DP World’s Global Freight Summit in Dubai.

He says that factories and the supply side are having a lot of trouble in China. You don’t know if you will be able to supply your goods tomorrow or whether you will have enough workers if you go into lockdown. The Chinese economy is very worried about this lack of predictability, and we hope that a solution will be found soon so that things will be more stable. You can’t go to your plants or supply networks, and neither buyers nor sellers can go to China. The current situation in China is unpredictable.

Africa faces difficulties and opportunities as a result of China’s weakness. The downside is that China, which is focused on its own economy and pulling back from the global economy, is unlikely to give Africa the same level of financial and investment support that it has provided so well over the last 20 years.

In a recent interview with African Business, Lauren Johnston, a lecturer at the University of Sydney’s China Studies Center, said that falling interest rates after the global financial crisis and searching for new markets helped China start lending on the continent.

The recent rise in interest rates around the world shows that this good situation no longer exists. Instead, Johnston said that China is struggling to “manage a credit portfolio in the face of global tensions and post-pandemic economic concerns.”

As we wrote in November, Chinese banks now want their loans to African countries to be paid back in full. This means African countries can no longer expect gifts or handouts disguised as loans.

According to Deborah Brautigam, head of the China Africa Research Initiative at Johns Hopkins University, “Chinese banks are reluctant to cancel or lower the principal on bank loans inside China; doing this abroad would be controversial among Chinese nationals.”

Therefore, it is unlikely that the days of cheap money will return soon. In 2016, China’s total financing for Africa reached $29.5 billion. Analysts have already pointed out that the funding for the regular flagship Forum on China-Africa Cooperation has gone down.

Supply-chain possibility

China’s choice to cut itself off from global supply chains gives Africa the chance to step up and increase its industrial capacity and productivity.

According to Barrelet, the center of the world’s manufacturing industry has already moved to Southeast Asia, with increased trade volumes in countries like India, Vietnam, Thailand, and Indonesia due to China’s retreat.

Barrelet said that Africa is resistant to global upheaval because it has a strong and growing need for things like the first TVs and refrigerators. Even though there may be a temporary slowdown in the flow of goods into Africa, the demand is still high. In the developing African Continental Free Trade Area, there is a chance of a large internal market.

What better way to start a positive feedback loop than for African businesses to step up and produce more of the essential items that the continent needs now that China is pulling back from global supply chains?

China will continue to be a significant producer for a very long time, so it is unlikely to happen rapidly. But a change like this could help Africa even after China is back in the global economy. It could create businesses and jobs in Africa, make the country less dependent on imports, and boost domestic spending.

Analysis by: Advocacy Unified Network

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