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China's economic crisis has flipped its relationship with Africa upside down

Dec 10, 2015, 14:30 IST

South African President Jacob Zuma (L) and Chinese President Xi Jinping (R) attend a signing ceremony at the Great Hall of the People in Beijing, December 4, 2014.REUTERS/Wang Zhao

Over the last decade, one of the biggest economic stories has been China's increasing involvement in Africa.

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Both the government in Beijing and businesses from around the country have looked for opportunities in the world's least developed continent. For some time, that was driven by insatiable Chinese demand for commodities, which were desperately needed for a national boom in building.

But there's been a major change to the China-Africa trading link, and far fewer people have noticed. In a note emailed to clients this week, Fathom Consulting looks at the new relationship.

Around the end of last year, Africa's economies stopped being net exporters to China and started being net importers - since then, the relationship has only become more dramatic.

Africa was building up a solid trade surplus with China in the aftermath of the 2008 financial crisis, running to more than $2 billion (£1.32 billion) in some months of 2014. There was a particularly strong period from 2010 until 2014, before it fell apart. Africa's trade deficit with China (and by extension, China's trade surplus with Africa) has never been bigger:

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Fathom Consulting

Here's another way of displaying that - here you can see China's imports from Africa outstripping their exports to the continent for the same 2010-2014 period, before imports from Africa plunged off a cliff:

Fathom Consulting

In fact, Africa is now barely exporting more to China than it was before the financial crisis began in 2008.

That means China's being squeezed on two fronts - they're crunched by the standard emerging market story in which dollar debts become increasingly unmanageable as the Fed begins to hike interest rates, and also by the tumbling Chinese demand for commodities.

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