China’s economic transformation and its integration into the world trading system has been one of the most remarkable economic events in recent decades. Its economy has grown by almost 10% per annum over the past decade and is predicted to become the world’s fourth economy in the next five years.
Its share in the world’s goods trade increased from 1% in 1979 to 6.5% in 2005. The Chinese economy has the potentials of becoming the world’s top exporter in the next decade due to the increasing FDI, high domestic savings and improved productivity.
The annual average growth rate of African exports to China was 20% and 48% respectively. China now accounts for about 20% of the world’s population. It has become an important player in the global economy and politics, actively participating in global institutions.
China is presenting a new significant challenge to the global economy and particularly the developing economies. No country can dare ignore China nowadays, especially the Sub-Saharan African countries such as Cameroon.
Cameroon’s economic growth started in 1994, after nearly a decade of profound economic crises during which real GDP declined at an average of about 4% per annum. After the 1994 devaluation of the CFA franc, the country’s competitive situation improved, terms of trade recovered and GDP growth became positive.
The donor community reacted promptly as Cameroon signed a third standby agreement with the IMF on March 1994 and her debt with the Pris Club was rescheduled a few days after.
Despite these positive developments, the burden of the external debt remained unsustainable as the total debt stock stood at US$7802 million in nominal terms by the end of June 1999.
Cameroon and China have signed several agreements in the domain of economic and technical cooperation. Most of these agreements define the modalities of the Chinese concessional lending to Cameroon, while others concern cultural, technical and also diplomatic relations.
This paper examines the traditional channels of economic interaction such as trade, investment and aid flows in order to understand the economic relations between China and Cameroon.
Results of the study show the following,
trade with China has increased significantly over the past few years
Cameroon has been running a large trade deficit with China which accounted for 82% of the total trade deficit in 2005
imports from China are providing cheap and diverse consumption
exports to China are all primary products while imports are essentially manufactured goods