Illustration: Luo Xuan/GT
The Group of 7 ended their meeting without any new directive to spur the world‘s economic growth, and at the same time grappled to avoid a looming recession due to a short-sighted, nationalist push from the US administration with its trade practices. While this was playing out, emerging nations, including Asian countries, took notice of the new African market that has been thus far immune to the erratic economic policies coming from the US.
Investors and global traders are attracted to the higher rate of return on foreign investments in Africa, and many economic indicators demonstrate clearly that there are key drivers behind the African economic expansion.
The over 3 percent average annual growth rate of the African GDP is one of the elements that make Africa a sustainable market for stable investment.
However, the GDP percentage does not offer a strong incentive or driver behind Africa‘s bright future. Indeed we have to understand that today Africa has shifted its economy from a resource-based, pure commodity exporter to new sectors such as wholesale, retail, transportation, telecommunications and manufacturing.
This change in economic emphasis, which has led to reduced risks inherent to a fluctuating commodity-based GDP, offers a new space to channel investment, focus on microeconomic growth and create a new economic leverage for Africa.
This newfound African growth in the middle of depressing international economic indicators puts Africa on a new level of geopolitical interest from not only traditional partners like the EU, but also from emerging economies from Asia, especially China.
In a matter of 12 years, trade volume between Africa and Asia has soared, with China taking the lead as the main trade partner, surpassing South Korea, Japan and the EU.
In 2019, the main source of investment and trade for Africa is Asia, and the newfound partners are taking the lead to transform the African continent‘s economic structure from a pure GDP-based exporter of commodities and resources into an economic powerhouse with advanced manufacturing capabilities in newer, promising sectors.
Infrastructure building has also seen rapid growth in the last 10 years, especially since the launch of the Initiative. China became the de facto driver for African transformation.
Receive News & Ratings Via Email - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings with MarketBeat.com's FREE daily email newsletter.
From building the only African light railway system in Ethiopia, a major railway linking land-locked Ethiopia to the seaport in Djibouti and the Mombasa-Nairobi railway line, China is integrating African regional powerhouses through rail, offering new opportunities for interstate commerce and developing local economies.
China‘s support can also be seen in the telecommunications sector. Huawei is building necessary networks for many African telecommunications companies, offering the know-how in communication technology to build the backbone of the future e-commerce and mobile-payment industries in Africa.
Finally, as for any economic driver, finance must follow. South Asia is bringing a unique support into play to achieve the 2063 African Agenda that focuses on connectivity within communications, transportation, manufacturing and people.
China is also a main contributor at the finance level. For instance, China is a member of the African Development Fund and the African Development Bank.
In 2014, the People‘s Bank of China and the African Development Bank announced the Africa Growing Together Fund, a fund of $2 billion to be used in economic development projects.
Africa took a great leap in a matter of 12 years in building up its infrastructure and manufacturing sectors, compared to the period between 1950 and 2006. This achievement could not have occurred if it were not for the newfound partnership between African nations and Asia, in particular with China.
However, we have to understand this shift as a new approach to rebalancing global economic order, instead of looking at it with a Cold War mentality that frames Asia as trying to influence the African continent.
Africa‘s turn toward Asia did not come against the interests of the Europeans or Americans, as they still have significant trade and investment relations with African nations.
On the contrary, Asian nations are complementing the needs of the continent, offering alternatives based on globalization, fair access to markets, and inclusive growth for all international actors.
Africa may become a new, neutral economic space for dialogue and cooperation between the EU, the US, China and other South Asian powerhouses that can help bridge differences and reduce tensions.
The author is director of education with the International Bachelor Program at the International School under the China Foreign Affairs University. bizopinion.cn