African economies are reeling from China’s surprise yuan devaluation amid fears the continent’s biggest trading partner might slash imports from oil to wine.
China’s demand for Angolan oil, Zambian copper and South African gold has fueled a steep increase in trade, helping fuel rapid growth but leaving economies exposed to policy shifts in Beijing, according to the Wall Street Journal.
In 2013, Africa’s trade with China was worth US$211 billion, more than twice that with the US.
By contrast, 15 years ago, the US traded three times as much with Africa as China did.
But now, a weaker yuan is stoking fears in some African markets that China’s buying power will be eroded and that the world’s second biggest economy may be slowing even more than official statistics suggest.
Razia Khan, chief Africa economist of Standard Chartered, said China’s move was happening at a difficult time for many African economies which have been buffeted by volatility that has sent many regional currencies lower this year as oil prices dropped and the dollar surged.
“Countries… with narrow export bases will be substantially disadvantaged,” she said.
Angola is battling a grinding foreign-exchange shortage, as falling oil prices and slack demand from China slash revenue from the crude exports that generate nearly all of its export earnings and public revenue.
In Zambia, copper mines are laying off workers or closing because local power shortages have made it too costly to keep production up as long as China’s waning demand holds global prices near six-year lows.
And South African producers of gold, wine and other goods say lower demand from China means less hope of lifting their country’s battered economy out of a four-year slump. South Africa’s finance ministry is forecasting economic growth of just 1.9 percent this year.
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