The rapid economic rise of China overthe last twenty years has sustained high global demand andprices for primary commodities such as oil and minerals,greatly benefitting Sub-Saharan (SSA) African countries.China now represents more than 20 percent of SSA'strade, up from just 2.3 percent in 1985. West Africa'sshare in China's trade is still quite low, 0.6 percentin 2012, but it is rising rapidly. Exports to China - oil,iron, phosphates, gold, cotton, cocoa and cashew nuts, havegrown fast. However, they have not grown as rapidly asimports, resulting in a large trade deficit with China (13percent of West Africa's GDP over 2009-2012). Reasonsinclude a strong consumption demand for inexpensive Chineseproducts as well as the import-content requirements indevelopment assistance agreements. Looking at the impact ofChina on West Africa, it appears that West African producersdo not compete with China on third markets; by and largetheir products are complementary. However, West Africanproducers are finding difficult to compete with China intheir own domestic as well as in regional markets. Thepaper's main messages are as follows: Chinese demandfor primary commodities is likely to continue in the nearfuture, potentially benefitting West Africa. To maximizethese benefits, West African countries need to maintainmacroeconomic stability and to design appropriate policiesto manage the volatility of commodity prices while raisingthe competitiveness of the economy. The current stagnationof the agricultural and manufacturing sectors in many WestAfrican countries is a sign of Dutch disease effects thatshould not be underestimated and need to be readdressed; andwhile the specific reforms needed vary from country tocountry, they should be comprehensive enough to generate ashift in the policy stance aimed at increasing productivityand encouraging diversification in the tradable sector.Examples of such reforms include the removal of traderestrictions among West African countries, the dismantlingof formal and informal trade barriers to regional processingactivities and the improvement of trade logistics.
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