China boost for African economies

WiredChina's economic boom has benefited sub-Saharan Africa due to factors like natural resources demand, research has found.

China accounted for almost the entire global increase in demand for copper, lead, nickel, tin and zinc from 1995 to 2011.

Standard & Poor’s Ratings Services said in a recent issue of Credit Matters that for every 1% rise in China's GDP growth rate, GDP had risen by 0.3% in low-income Sub-Saharan Africa.

This category includes countries such as the Democratic Republic of Congo, Ghana, Guinea, Mali, Mauritania, Mozambique, Rwanda, Senegal, Togo or Uganda.

In middle-income countries – such as Angola, Cameroon, the Republic of the Congo, Ivory Coast, Sudan and South Africa – the impact has been slightly more favorable at 0.4% GDP growth per 1% rise in Chinese GDP.

“The reason for this strong link is that China's economic expansion has been mainly investment-led, boosting its appetite for commodities sourced in Africa,” the authors said.

“But China's economy is now starting to rebalance away from investment and exports toward consumption. We believe that this shift will have significant consequences for commodity markets and, in turn, for Sub-Saharan African commodity-producing economies.”

©2012 funds europe