Illusion or Reality: Understanding the Trade Flow Between China and Sub-Saharan Africa

The authors examine the trade flow between China and Sub-Saharan Africa (SSA) with the use of the gravity model. The authors examine the impact that variables such as gross domestic product (GDP), distance, foreign direct investment (FDI), inflation, exchange rate, and GDP per capita have on trade flow between China and SSA and vice versa. The authors also examine how the trade flow of oil-rich countries is affected by trading with China while considering the interactions with other macroeconomic variables. The specific objectives are to assess the trade flow between China and SSA; identify the variables that predict trade flow from China to SSA and vice versa; examine the trade flow between oil-rich SSA countries (Angola, Equatorial Guinea, Nigeria, the Republic of Congo and Sudan) and China; and develop desirable policies that will enhance China–SSA trade while protecting the industries in SSA. The result of this article improves understanding of why Sino–Africa trade is an illusion that is gradually becoming a reality.