Dar es Salaam. China could be very far from Tanzania. But, if the Asian country’s current low economic growth rate persists, it could have far-reaching ramifications for the East African nation – and also for Africa as a whole, analysts say.
China’s economic growth slowed by more than expected in the third quarter, official data showed yesterday.
China, which is the world’s second largest economy after the US, bounced back swiftly from the Covid-19 pandemic.
However, recovery is losing steam, with gross domestic product expanding 4.9 percent on-year, according to figures from China’s National Bureau of Statistics (NBS).
NBS spokesman Fu Linghui told reporters yesterday that “current international environment uncertainties were mounting and the domestic economic recovery was still unstable and uneven.”
The economy grew only 0.2 percent from the previous three months, the weakest since a historic contraction in the first quarter last year.
And, analysts, who spoke to The Citizen yesterday said that China being the largest source of Foreign Direct Investment (FDI) to Tanzania, its low economic growth rate would also impact Tanzania and Africa in general.
A few years back, China leapfrogged its Western peers to become the largest foreign investor in Tanzania, thanks to the aggressiveness of its people in searching for new markets outside the world’s most populous country.
Cumulative figures for the period between 1990 and 2017 show that China is leading with investments worth $5.963 billion.
An economist at the University of Dar es Salaam, Dr Abel Kinyondo, said China’s slow economic growth is not a good thing because, in the past decade, it has been driving the world economy in the forms of loans, grants and investments in infrastructure.
In a somewhat pessimistic view, he said, its slow economic growth will lower their aggressiveness in investing elsewhere and thus taking down FDI, corporate tax, employment and transfer of technology.
Prof Delphin Rwegasira of the University of Dar es Salaam’s Economics Department said that, given China’s importance in the global economy, and its healthy demand for anything from commodities to machinery, any downturn is likely to have far-reaching effects.
On the other hand, he said, with the slow economic growth rate, production in China was likely to go down and so is Tanzania’s imports.
Tanzania imports a variety of products from China including machinery, electronic equipment, vehicles, iron and steel.
Official data has it that the bilateral trade volume between Tanzania and China in 2020 was $4.587 billion, thus registering a 9.98 per cent year-on-year growth.
Another renowned economist, Prof Samuel Wangwe, said “China’s demand for raw materials with which to feed its industries is likely to decrease – and if we don’t have alternative markets, the prices are likely to fall sharply.”
A business expert and economist, Mr Donath Olomi, said China’s slow economic growth was likely to affect its investment power and appetite in Tanzania and Africa at large.
“It is too early to jump to conclusions. But, if the situation persists, we will be adversely affected,” he stressed.
