Pretty much every major economic indicator suggests that the Chinese economy will continue its downward momentum in 2019. Industrial production, retail sales, and even the once red-hot property market are all showing real signs of weakness. Some economists even believe that economic growth in China next year will fall below the 6 percent level.
This is all potentially very troubling news for Africa, which is becoming increasingly dependent on the Chinese market to buy resources and as the primary source of investment capital. In several African countries, the value of local currencies is effectively linked to Chinese economic data. The South African rand, for example, is valued in line with almost everything that happens in the Chinese economy.
This shouldn’t come as a tremendous surprise given China’s outsized role in South Africa and as Africa’s predominant trading partner.
Beijing-based economist Jeremy Stevens closely studies the Chinese economy and its impact on African risk for his clients at Standard Advisory China, a unit of Africa’s largest bank Standard Bank. He joins Eric this week to discuss the Chinese economic outlook for 2019 and what the implications are for Chinese trade and investment with Africa.
Recommendations
- “China’s Bleak Economic Data Exposes Trade War Scars,” Issaku Harada and Coco Liu, Nikkei Asian Review, December 14, 2018
- “China’s Economy Still Slowing as Policy Makers Form 2019 Plans,” Matthew Boesler, Natalie Lung, Yinan Zhao, and Kevin Hamlin, Bloomberg, December 14, 2018
- Inside China newsletter, Jeremy Stevens