The trade war fought between US and China is casting its shadows in Africa also. The lingering trade war is set to escalate now. The latest development in which US president Donald Trump has decided to ban by decree American telecom networks from sourcing equipment from foreign companies deemed to be a measure targeting Huawei, the Chinese technology giant. Chinese retaliation is bound to be there. But with the latest relaxation by the US administration to extend the ban for 90 days or so may not attract any knee-jerk gesture from China. But for certain, these skirmishes may last longer. Many feel it will have its impact on Africa since most of the attention of the world’s largest investing countries will now be focused on moving rookies and horses in the chess board.
The main allegation of the US administration is that the Chinese company which is a key player in the production of mobile phones and 5G in particular is a suspect of spying for Beijing. There are also experts who believe that the reasons for the ban on Huawei hinges on technology leadership of the future. There are many technology companies, which are actively involved in developing cutting edge technologies in China, relating to artificial intelligence, robotics, internet of things (IoT) etc. Some of them have gone much ahead of the US corporations. One example is 5G, which can trigger a major revolution in telecommunication and information technology. In all likelihood, Huawei may launch 5G much ahead of American companies including Qualcomm and Intel.
What should be the follow-up action of Africa? First and foremost, African nations should fast track the Continental Free Trade Agreement. The reason is not far to seek. Studies conducted by various agencies clearly say that both countries are going to be adversely affected by the ongoing trade war. The Chinese economy is on the back foot stung by the fragile capital market, contraction of exports, slowing down of the manufacturing sector, escalating inflation etc. Because of the iron curtain, nothing is coming out in the public domain and whatever little in the public domain are fudged.
The US companies are complaining about the increase in raw material cost due to jacking up of the import duty. Also, the farmers in the US are up in arms because their exports to China have been greatly affected due to the economic blockade created by Chinese retaliation by increasing the import duty on US goods.
What is the way out for Africa? They have to work towards fructifying the African common market earlier then the dead line set. They should expect that nothing much is going to come from China or the US if the trade war lingers on. As a first step, they should strengthen their intra-trade. But the pertinent question is whether the African countries realize that their development should come from within and not from outside. Sooner they realize the truth the better.
