Study On Promotion And Development Of Trade Between China And Africa

China's trade with Africa traces back to two thousand years ago, yet the current pace has started to improve in the early1950's, when the Asia-African conference held in Bandung, Indonesia from April18to24, in1955. The meeting aimed at promoting economic and cultural relations between the two continents and opposing colonialism or neocolonialism. The recent pace of development between Africa and China relations has drawn significance attention of many countries. Africa, then labeled "doomed and hopeless continent", suddenly, today it is seen as a "rising" one at the dawn of international trade. China's engagement today is occurring under new circumstances in which a more developed China operates under conditions of growing interdependence and plays an increasingly important role in the global economy.This research analyses the empirical measures of China-Africa trade and FDI developments for the recent years, while keeping in view the geopolitical scenario of china opening up, post cold war and post WTO eras of the international trade politics. Africa too has been attracting the world powers eye for being a home of precious natural resources. In the year2011, out of the world total trade USD35892.3billion, African trade accounts to USD1149.3billion, a3.20%of the global trade. Which was only USD268.8billion, a2.09%of the world total trade in the year2000, USD12889.1billion. What are the implications of this trade development on Africa and around the globe? In order to spotlight this more clearly and exhaustively, this thesis works on the main characteristics of the basis of trade relations, its components and trends in relation to various states of bullish and sluggish movements. The volume of trade between China and Africa was US$12million in1950. In1955, it grew to US$34.74million, and in1965it reached US$250 million. Since China launched its reforms and opening-up program in the1980s, it has attached great importance to friendly cooperation with African countries. The Sino-African trade has maintained an average annual growth rate of3.6percent, but in some years that figure has been higher than40percent. Over the15years period,1995-2012trade between Africa and China had increased by over50folds. From an insignificant level in the previous decade, China now accounts for11percent of the continent's external trade. In2000, the volume of trade exceeded US$10billion. In2005, that figure increased to US$39.74billion, over800times what it was50years ago. After more than ten years of continuous growth, China-Africa trade fell in2009due to the influence of global financial crisis, yet, in2010, the trade volume showed a sharp increase of16.2%. Trade between China and Africa grew and hit an historic high-mark in2012as it accounted to US$198.5billion, despite the turbulence in some Northern African countries, overall trade between China and the continent has increased twelve-fold, since1995and China became Africa's largest trade partner overtaking United States, France and United Kingdom. The six major traders i.e. China, France, Germany, India, UK and USA, altogether export about40%of the total goods imported by Africa. Their imports from Africa are mainly centered in raw materials to feed their industry. It's notion-worthy to see that only six countries together buy about51.63%of total exports of Africa. Therefore, it's quite unjust to make a stance about Sino-Africa trade, while keeping the rest of the world aside. So this thesis encapsulates a combined analysis for the patterns of the trade between Africa and the group of six major trade partners of Africa, China, France, Germany, India, UK and USA.This Thesis spares no chance to explore the nature and determinants of Chinese FDI in the region in the light of all the allegations on increasing Involvement of the rising economic giant in the continent. There has been a dramatic shift in the attitude of the developing countries with respect to IFDI in the recent years. The change has become particularly visible since the mid1980s, when most of the developing countries have adopted a much more favorable laws and regulations for FDI. According to the distribution of FDI inflows at global level, from2001to2007, the global IFDI increased almost140%an average growth rate of18%. But, from2008continuous declination in IFDI was experienced due to world financial crisis which reached135billion USD in2012. For the same period of time, in the developed countries, FDI inflows decreased its share from72%of global FDI inflows in year2001to41%in2012. While, there seems a continuous increment in IFDI in the developing economies from28%to58%in year2001and2012respectively accounting the annual growth rate of14%in stated time period. The developing countries witnessed this steady rise in FDI inflows due to existence of appropriate institutions and basic infrastructure. African IFDI arose in2012from20billion USD in2001with the compound annual growth rate of12%.One of the first Chinese landmark investments in the African continent was the Tanzania-Zambia railway (TAZARA) railway project after its funding was denied by the World Bank in1970. Today, Chinese investment covers a wide range of sectors including infrastructure, education, and information technology. These investments can benefit Africa and all of its trading partners. One of the major causes of many African countries for attracting FDI is the abundance of natural resources over there, especially; petroleum, precious metals and copper ores. Chinese FDI in Africa mainly includes; oil exploration, agriculture development, manufacturing, transportation, communications, water conservancy, electric power and many other fields. In a bird eye view, it is easy to observe that China's FDI to Africa is not more than5%of its Total FDI around the globe, though it has a rapid uplift in the last decade. The largest volume of flows over the period covered went to South Africa, Sudan, Nigeria, Zambia and Algeria respectively. This group of countries accounted for62.5per cent of China's total OFDI flows to Africa between2003and2011.As a continuum of the spirit of win-win policies of China for its trading partners, at the advent of new millennium, it was indispensible for both the sides to have a drift in relations, a visible sum of sympathies and a more solid basis of economic and political friendships:It was the time when FOCAC came into being, the Forum on China Africa Cooperation. It entailed a rapid development in tourism, agriculture and infrastructure in Africa. Decisions on Cancelling African countries debts to China, making of Special Economic Zones, Non-tariff treatment of440African products were made in consequent FOCAC meeting. While increase in aid grant, training of African professionals and building of hospitals and schools were also decided during the five chronological meetings of the Forum held every third year from2000to2012. This thesis dares to find cogent reasons to relate the trade, FDI and the aid developments together with political and socio-economic variables of the study, to formulate a prosperous and fruitful model of relationship between China and Africa.