Donald Trump has more than doubled tarrifs on $200 Billion worth of Chinese goods this year, sparking predictable retaliatory actions from China, which accuses the hirsute trade warrior of “intimidation and coercion ”. Perhaps so, perhaps not but the Commander in Chief has also slapped 5% tarrifs on Mexican imports this year in pursuit of his own brand of international diplomacy with its central tent that “trade wars are good and easy to win”. Really? Last month we saw the aftershocks of all this, graphically illustrated by the Hang Seng Index falling 1% and the Nikkei Volatility Index by 1.5%. Because, in truth, nobody likes a trade war: they are bad and easy to lose. And why? Well that was illustrated in turn by General Wei Fenghe:“ If the US wants to talk we will keep the door open. If they want to fight we will fight to the end”.
General Wei Fenghe is China’s Defence Minister: lets just hope he isn’t talking about a real war.
But there’s a bigger picture too: take a look at the global implications of these high level spats, take a look at Africa: Sub Saharan Africa to be precise.
These recent Trade Wars have also brought in a much laxer system of global trade governance, but the G20 is still committed to ensuring minimum levels of global coordination, and these commitments are focused on Africa in particular. China, the United States, France and the European Union are all scrambling to launch trade initiatives and negotiate bilateral trade deals with African States (as is the United Kingdom: perhaps forgetting it is still for the moment part of the EU, remember Mrs May’s dance class in Nigeria? Come to think of it, who was Mrs May).
But back to the serious stuff: all these efforts will reach a grand culmination this autumn when the UK will play host to an African Investment Summit where a major part of the host’s ambitions will be to roll over existing trade relationships and nurture new ones so as to mitigate the risks of a Halloween Cliff Edge. And whoever has the keys of Downing Street by then, he (it will be a he) is unlikely to be pushing at a closed door: the African Union is just as keen to work with the UK in developing an external trade deal for the Continent as a whole.
Then, of course, there’s the ubiquitous Belt and Road Initiative where China continues to pour huge amounts of money and infrastructure into Sub Saharan Africa causing the US, Canada, the EU and the UK all to formalise their own Bilateral Development Finance Institutions designed to support African jobs and Industry as a counterpoint to China’s success: demonstrating (in cash) that China isn’t the only show in town. But none of this will work unless Africa itself is front and centre of the process and that will inevitably give the region a new kind of enhanced soft economic power: power it has never before experienced, at least since the days when Cecil Rhodes marched in and stuffed his pockets with diamonds.
So here’s the takeaway: China is in a trade war with the US, the US is in a trade war with China and Canada and the UK is in a perpetual state of warfare with the EU and the EU is waging a trade war with the US…But they’re all now uniting in search of fresh trading opportunities in Africa.
And for its part, Sub Saharan Africa is now playing the smart game, the long game of looking both inwards and outwards by way of its recent ratification of the African Continental Free Trade Agreement, which will provide a secure and stable basis for future integration.
As far as Africa is concerned its jaw jaw and not war war that’s likely to win the day, whatever Washington might think.
The African Impact Fund aims to build on the opportunities offered by Sub-Saharan African Markets and to deliver long term capital growth as well as income distribution, working to solve social and environmental challenges and at the same time deliver sustainable profits for investors.
The Sub-Saharan African Economy has grown by 4.6% since 2000, so I’m not surprised the world’s economic superpowers are now beating a path to its door, even if they are (unhappily) tearing themselves apart internally in the process. The fact is that the G20 remains committed to supporting Pan African growth and economic opportunities and recent events have shown that its key players are, quite literally, putting their money where their mouths are.
And that has to be good for Africa: especially given Sub Saharan Africa already boasts some of the fastest growing economies on the planet as well as one of the world’s greatest reserves of untapped consumer demand.
I’m looking forward to seeing what happens in London this autumn…