Editor's choice China's African Financial Engagement, Real Exchange Rates and Trade between China and Africa

Sylviane Guillaumont Jeanneney () and Ping Hua

Journal of African Economies, 2015, vol. 24, issue 1, 1-25

Abstract: In the last decade, China's trade with Africa increased faster than its overall foreign trade. This article focusses on the role of real exchange rates in this growth. A ‘bilateral real exchange rate’ augmented trade gravity model applied to China's trade with 49 African countries over the period 2000–2011 shows that the real appreciation of most African currencies relative to the renminbi favoured China's exports to these countries, but had no impact on China's imports from Africa. This real appreciation of African currencies is explained by three main factors: the decision to peg them to other currencies (in particular to the euro), the amount of export of raw materials from African countries and the amount of financial assistance from international donors including China. Thus, a kind of detrimental sequence exists in Africa's relationship with China: China's imports of raw materials and its economic co-operation are among the factors explaining the appreciation of African real exchange rates, which itself stimulates China's exports of manufactured goods, and so restricts Africa's own industrial development.

Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1093/jae/eju020 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:jafrec:v:24:y:2015:i:1:p:1-25.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

Journal of African Economies is currently edited by Francis Teal

More articles in Journal of African Economies from Centre for the Study of African Economies Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().