Malawi to benefit from China’s new growth model
Malawi stands to benefit from China’s shift from investment-led to consumption-led growth as one of the exporters of consumption commodities.
This is contained in the recently released International Monetary Fund (IMF) staff paper titled A rebalancing act for Africa and China: the effects of China’s rebalancing on Sub-Saharan Africa’s trade and growth by Wenjie Chen and Roger Nord.
The staff paper written by by Wenjie Chen and Roger Nord observes that overall, Africa’s commodities exports have fallen as a result of the decline in Chinese demand and the precipitous fall in world commodity prices, putting pressure on the fiscal and external accounts of many African countries.
Malawi, Benin, Burkina Faso, Kenya, Mali, Madagascar, Uganda, Central African Republic, Ghana and Zimbabwe are China’s net commodity exporters of agricultural and foods exports, according to the paper.
Available statistics indicate that fuel, metal and mineral products account for 70 percent of sub-Saharan African exports to China whereas the majority of sub-Saharan Africa’s imports from China are manufactured goods, followed by machinery.
However, lower investment in China has curbed the country’s appetite for raw materials, resulting in a sharp swing in its trade balance with sub-Saharan Africa.
Growth in construction and real estate investment, for example, has fallen sharply.
“Depending on the type of commodities a country exports, China’s rebalancing from investment-led to consumption-led growth is expected to affect the country differently,” said Wenjie in the report.
Figures from the National Statistical Office (NSO) show that tobacco, tea, sugar, coffee, apparel clothing, rice, groundnuts, cashews, macadamia nuts and natural rubber top the list of Malawi’s exports, mainly to China and other Asian countries.
Ministry of Industry, Trade and Tourism spokesperson Wiskes Nkombezi is on record having said the main problem has been that while the country strives to grow its exports, Malawians tend to increase imports as well as expanding the trade deficit.
