Since the Covid-19 pandemic, which ravaged the world and brought the global economy to its knees, the world has continued to face unprecedented challenges, from slow economic growth to wars in the Middle East and Ukraine and an impending trade war between the US and China.
These issues have serious ramifications for developing countries. This is happening against the backdrop of rising anti-globalisation, anti-multilateralism and protectionism, all threatening the global economy and international trade system, highlighting the need for countries to explore alternative solutions to tackle these challenges.
When the US and its allies impose conditionalities through their financial institutions, often rigged to discriminate against developing countries in Africa, China has taken a different approach.
Earlier this month, China’s Customs Tariff Commission announced that all least developed countries with diplomatic relations with China would benefit from zero tariffs on all products exported to the country.
However, this preferential tariff applies only to products within the tariff quota, with the tariff rate outside the quota remaining unchanged.
This move by the world’s second-largest economy demonstrates China’s commitment to upholding multilateralism and supporting free trade in this complex global trade environment.
Africa, with the highest number of LDCs, stands to benefit greatly from China’s new zero-tariff policy.
By leveraging this special preferential tariff through the African Continental Free Trade Area, African countries could increase exports to China, tapping into its 1.4 billion-strong market.
The policy will lower the threshold for these countries’ products to enter the Chinese market, raise export revenues and promote the development of related industries.
As of December 2023, some of the African LDCs include Tanzania, Ethiopia, Uganda, the Democratic Republic of Congo, South Sudan, Sudan, Somalia, Rwanda and Zambia.
These countries could benefit from China’s preferential treatment by working together instead of adopting an individualistic approach.
China, as the largest developing country, understands the challenges many nations face in international trade. Through initiatives like the Forum on China-Africa Cooperation and the Belt and Road Initiative, the Asian giant has supported African countries in their economic transformation.
The latest move to impose zero tariffs will further support Africa’s Sustainable Development Goals and Agenda 2060, contributing to job creation, poverty reduction, economic growth and social progress.
At the ninth FOCAC summit in September 2023, Chinese President Xi Jinping announced $50 billion (Sh6.4 trillion) in financial support to Africa over the next three years.
Africa must seize this opportunity to enhance cooperation with China for mutually beneficial outcomes.
This financial support reinforces China’s commitment to high-standard opening-up and high-quality development, aiming for peaceful development, mutual prosperity and a partnership grounded in trust, assistance and understanding.
China’s zero-tariff policy for LDCs demonstrates its ongoing commitment to reducing trade barriers and improving the global economy.
Despite the current climate of anti-globalisation and protectionism, China remains dedicated to multilateralism and free trade, injecting stability and positive energy into the global economy.
This policy helps maintain global supply chain stability and provides vast market opportunities for enterprises worldwide, promoting the optimal allocation of global resources.
For mutual gains, especially in trade and industrialisation, Africa must adopt a collective approach rather than individualistic strategies.
Despite China’s willingness to elevate its relationship with Africa, the lack of a unified approach from African nations has often undermined the success of cooperation.
Critics often blame Beijing, but Africa has failed to fully utilise the AfCFTA to exploit its 1.4 billion market share.
African leaders should leverage AfCFTA and focus on collective negotiations rather than signing individual trade agreements with China.
This approach could help bridge the trade deficit. During FOCAC, President Xi outlined ten partnership action plans for the next three years, covering mutual learning, trade, industrial cooperation, connectivity, health, agriculture, cultural exchanges, green development and security.
Africa should unite to unlock the benefits of these promises for the prosperity of its people. China has committed to helping Africa achieve industrialisation, which aligns with AfCFTA’s objectives.
If Africa harnesses both initiatives, it will yield significant benefits and reduce the trade deficit. AfCFTA seeks to promote industrialisation, diversify economies and develop regional value chains and the manufacturing sector.
As AfCFTA eliminates tariffs, African nations should work under this
framework, supported by the African Union Commission, to negotiate
trade deals not only with China but
also with other global partners to
maximise bilateral ties.
