Sino-African Trade Relations: The Role of Policy Uncertainties

Abstract

This study evaluates the potential roles of China’s domestic and external policy uncertainties in its trade relations with African countries. We focus on 32 African countries, using data ranging from 2000 to 2021 as informed by data availability. Using a panel ARDL approach, the outcomes indicate that: (i) while China’s trade policy uncertainty causes transient trade reductions in bilateral trade (both exports and imports) with Africa, trade increases in the long run, suggesting Africa’s resilience to the uncertainty shocks; and (ii) external policy uncertainties and USChina tension index are more likely to improve Africa’s trade position in Sino-African trade relations, particularly by increasing China’s imports from Africa, thereby contributing to a trade surplus for Africa. We also discuss the policy implications of these findings. Specifically, African countries should diversify their trade partnerships and strengthen domestic productive capacity.