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The rise of the Chinese consumer: Opportunities for Africa .....

07 April 2010 Simon Freemantle,Jeremy Stevens

The nature and scale of contemporary economic growth in China has given rise to several meaningful macroeconomic imbalances, which threaten to hinder the next cycle of economic expansion. Foremost of these challenges is the need to increase domestic consumption to act as a counter-weight to the current over-reliance on export-led growth. Bolstered by natural and policy-induced shifts, pockets of consumerism are already developing in China. In 2009, China surpassed the ‘magical’ USD3000 GDP per capita mark, following which a significant increase in consumption’s share of GDP is expected. Further consumption growth in China will be bolstered by income growth, the gradual appreciation of the Renminbi, advances in urbanisation and the deepening of financial systems. Boosting domestic consumption will be a vital component of China’s 12th Five-Year Plan, to be announced at the end of 2010 to guide China’s economic process from 2011-2015.

These structural shifts mean that Chinese consumption could expand from USD1.72 tr currently to USD15 tr by 2020, with China’s share of global consumption thus increasing from about 5% to approximately 23%, potentially making China the world’s largest consumer within the next decade.

Naturally, these shifts will have seismic implications for the global economy, and how countries position themselves in relation to China’s internal structural transformation will largely determine their own economic trajectories. For Africa, the increase in consumption in China provides abundant commercial opportunities. Already, African LDCs enjoy preferential access for 454 products into the Chinese market (full product list attached in this report). This list will be increased to almost 5 000 products by 2013, providing cogent opportunities for pragmatic African exporters in capturing market share in China. Rising income levels in China will provide African manufacturers with new opportunities to flaunt competitive labour cost advantages. Moreover, shifting patterns in China will lead to dramatic rises in outbound tourists and the diversity and volume of food products imported into the country, raising the value of Africa’s staggering agricultural potential.

To be sure, the structural shift in China’s economy presents a formidable opportunity for African countries to rebalance and deepen the nature of Sino-African ties.
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