manufactured goods, most of them final consumption goods.<sup>10</sup> This is, of course, not an unfamiliar story in international development and represents a particular threat to Africa’s nascent manufacturing sector. The outlook is not entirely bleak although there is considerable evidence that domestic manufacturers in some African countries are being squeezed by China-sourced imports, especially in the clothing and furniture sectors. Also, although there is no doubt that a boom in commodity prices could favor certain Sub-Saharan economies; it also poses severe problems of economic management: if poorly handled, it could easily become a “resource-curse.”<sup>11</sup> Outside of clothing and textiles, there seems to be little trade between China and Sub-Saharan Africa in intermediate goods, let alone clear signs of major cooperation in coordinated global value chains.

# _C. Opportunities_

The opportunity for Sub-Saharan African countries from a mounting Chinese commercial interest is an area well-worth examining. Both China and India have seen a growing middle class over the last decade with increasing purchasing power, and an avid appetite for imported goods. This means that China and India are not just big _potential_ markets for African goods. Compared to the United States, Japan and the European Union, China is a much more open economy than Africa’s traditional markets in the West. Imports into China as a percentage of GDP constitute more than 25%, while the equivalent ratio for the U.S., the E.U. and Japan is but 15%, 14% and 11% respectively.<sup>12</sup> Furthermore, Chinese and Indian trade involvement in Africa also creates the possibility of ‘spillovers’ through the attraction of foreign direct investment in infrastructure, and through technology and skills transfers.

The central concern for Sub-Saharan Africa is whether they can successfully leverage this new-found bargaining power in order to be a more pro-active player in global network trade. First and foremost, Sub-Saharan Africa needs to start by getting its own house in order – i.e. the policies, institutions and trade-enabling physical infrastructure that will be the critical foundations for any future exportoriented economic growth. There already is plenty of anecdotal evidence of Chinese direct investment in roads and transport infrastructure as well as power generation.<sup>13</sup> Chinese firms are also setting up plants in Africa (especially in apparel) in order to circumvent restrictive quota regimes and enjoy free market access to the European Union via Cotonou and the United States via AGOA (one good example is Lesotho). Another favorable aspect of South-South investment is that developing countries tend to be less risk averse and more willing to deal with

> 10 Africa’s top 10 exports are crude oil (37%), diamonds (6%), platinum (3%), gold (2%), coal (2%), cocoa beans (2%), motor cars (2%), ferro-alloys (1.5%), aluminum (1.3%) and cotton (1.2%). Africa’s top 10 imports are ships and boats (4%), passenger motor cars (3.5%), motor vehicle parts (2.4%), medicaments (2.3%), crude oil (2%), radio transmitters (1.4%), cotton fabrics (1.3%), rice (1.2%), wheat (1.1%) and electric appliances (0.9%).

> 11 Goldstein et al, “The Rise of China and India,” pp. 69-74

> 12 IMF, International Financial Statistics, 2006

> 13 Hilsum, “We Love China,” Granta, p. 1-6

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