An Empirical Study Of Chinas Trade Potential With Africa.

In recent years, China has intensified its economic engagement with Africa. Growth of thernbilateral trade has, in particular, been dramatic. This trade link is expected to havernimplications for the development of both economies. How much is the room to further expandrnchina's trade with Africa? This thesis work is a quantified evaluation of the trade potentialrnbetween china and Africa. Trade complementarities index (TCI) and stochastic frontier gravityrnmodel of trade (SFGM) are the methods used for the empirical analysis. Calculations of TCIrnshow that on average, the degree of correspondence between the export pattern of Africanrncountries and the import pattern of China is about 63 percent. In addition, estimation results ofrnSFGM suggest that China has realised, on average, only 13 percent of its export potential withrnAfrican countries. Therefore, the scope to expand the China-Africa trade over the near-to mediumrnterm appears to be large. This study recommends that apart from reforming tradernpolicies, both China and Africa should remove other behind-the-border and trade-faci litationrnconstraints in order to actualise their full trade potential.

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