China – Africa: Will the new Covid-19 wave affect trade with the continent?

Eric Olander
By Eric Olander

Managing Editor, The China Africa Project

Posted on Wednesday, 3 November 2021 11:20

Lines of trucks are seen at a container terminal of Ningbo Zhoushan port in Zhejiang province, China, August 15, 2021. Picture taken August 15, 2021. cnsphoto via REUTERS

There's growing concern among African traders that the new clusters of Covid-19 infections being reported in at least 11 Chinese provinces could lead to major disruptions.

While global trade experiences unprecedented disruptions of major supply chain networks, that turbulence does not appear to have had much effect on the volume of Chinese trade with African countries, at least so far.

Chinese customs authorities announced last week that two-way trade for the first eight months of the year totalled $162.7bn, 40% higher than the same time last year. At this pace, bilateral trade between China and African countries is on track to easily exceed the $187bn the two regions did in 2020.

But there’s growing concern among African traders that new clusters of Covid infections reported in at least 11 provinces over the past week could lead to another wave of manufacturing and port shutdowns similar to the temporary closure of the Meishan terminal at the Port of Ningbo in August.

The shuttering of just that one terminal at the world’s third-largest port worsened already acute shortages of containers and vessels.

“Without shipping vessels coming through to African harbours with containers to offload, it creates a multiplier effect as there is then a lack of containers to export goods out of the continent,” said Philip Myburgh, head of trade at South Africa’s Standard Bank.

Covid-19 and port closures are just among a growing list of threats to the trading system that disproportionately impact African countries, given their dependence on imported food and finished goods, and their economies’ focus on commodity exports:

  • Power shortages: The ongoing electricity crisis in at least nine Chinese provinces is contributing to China’s slowing economy due to temporary factory closures. A weaker Chinese economy will invariably lead to reduced demand for African oil, timber, and minerals that account for the bulk of the continent’s exports to China.
  • Lack of containers: Traders in Kenya and throughout Africa are complaining of a lack of shipping containers to export their products. The few that do arrive now cost considerably more, putting added pressure on their bottom lines. Containers are either stuck in port, stranded in the wrong places or have been diverted for use on more lucrative trade routes between China and the US, Japan and Europe.
  • Vessels: Congestion at the world’s largest ports means that hundreds of ships are idling offshore in an unprecedented traffic jam that is leading to product shortages and sharp increases in shipping costs. 88 ships are waiting to berth in Shenzhen, 68 in Shanghai, and 35 in Los Angeles. Just as with containers, with so many vessels offline, shipping companies are diverting their available fleets to the most lucrative routes which often leaves developing countries waiting at the end of the queue.
  • Aviation: China’s strict Covid restrictions for flight crews have resulted in a sharp reduction in the number of passenger and cargo flights to Africa and other developing regions. This has a direct impact on perishable exports like Kenyan and Ethiopian flowers, for example, that depend on reliable air links to China. The lack of flights from China is also leading to shortages of electronics in Southeast Asia.

A new report from Kenya’s Central Bank highlights the challenge facing dozens of African countries that rely on China as its largest source of imports. China accounts for 24% of all Kenyan imports and finding alternative suppliers is going to be extremely difficult, if not impossible.

Similarly, with almost $35bn of Chinese trade passing through South Africa so far this year (a lot of what is shipped from South Africa originates in neighbouring countries like the DRC), means that South Africa is highly exposed to the various disruptions that could reduce trade flows with China.

This article was published in partnership with The China-Africa Project. 

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