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Bilateral trade between china and sudan
1. Bilateral Trade
between China and Sudan
International Economics, Spring Semester 2013
Eumni Kim, Hana Jin, Peter Enos, Sophea Sok,
Fatima Ibrahim, Sabin S. Chaudhary,
Foster Abogye Gyamfi
2. Contents
I. Overview / Country Profile
II. Trade History
III. Trade Policies
IV. Major Commodities
V. Terms of Trade
VI. Challenges of Bilateral trade
VII. Future trade opportunities and Conclusion
3. Ⅰ. Overview – China at a glance
FULL NAME, CAPITAL: PEOPLE'S REPUBLIC OF CHINA,
BEIJING
LANGUAGE: Standard Chinese (Putonghua, official)
POPULATION: 1,344.1 (millions)
KEY ECONOMIC RATIOS & LONG-TERM TRENDS
1. Rapid Economic Performance in China
Source: IMF, World Economic Outlook (Apr. 2013)
By Eunmi, Kim
4. Ⅰ. Overview – China at a glance
2. TRADE
Breakdown in economy's total Exports Breakdown in economy's total Imports
Agricultural products 3.4 Agricultural products 8.3
Fuels and mining products 3.1 Fuels and mining products 29.6
Manufactures 93.3 Manufactures 59.2
- Main destination
1. European Union (27) 18.8 1. European Union (27) 12.1
2. United States 17.1 2. Japan 11.2
3. Hong Kong, China 14.1 3. Korea, Republic of 9.3
4. Japan 7.8 4. Taipei, Chinese 7.2
Source: Development Economics LDB database, World Bank
By Eunmi, Kim
5. Ⅰ. Overview – Sudan at a glance
Country Profile
FULL NAME, CAPITAL: REPUBLIC OF THE SUDAN,
KHARTOUM
LANGUAGE: Arabic, English (official)
POPULATION: 34.3 (millions)
KEY ECONOMIC RATIOS & LONG-TERM TRENDS
1. Economic Performance in Sudan
Source: IMF, World Economic Outlook (Apr. 2013)
By Eunmi, Kim
6. Ⅰ. Overview – Sudan at a glance
Country Profile
TRADE
Breakdown in economy's total Exports Breakdown in economy's total Imports
Agricultural products 6.2 Agricultural products 23.8
Fuels and mining products 87.6 Fuels and mining products 3.1
Manufactures 0.7 Manufactures 72.2
- Main destination
1. China 65.3 1. China 16.6
2. United Arab Emirates 10.5 2. European Union (27) 14.4
3. Canada 8.8 3. Japan 9.5
Source: Development Economics LDB database, World Bank
7. Ⅱ. Trade history between Sudan & China
◈ to establish official relationships
◈ ETC(Economic and Technical
Cooperation)
◈ CSTP(Cultural, Scientific and Technical
Protocol)
◈ the Tiananmen Square crackdown & the Bashir
-Turabi coup
=> alienated China&Sudan from western
countries and led them to a strong
partnership.
19591959
19891989
19621962
19701970
By Hana Jin
8. Ⅱ. Trade history between Sudan & China
◈ C began to pursuit external E sources
- By 1996, CNPC took control of most of
Sudan’s oil
◈ Purchased 70% of Sudanese oil exports
◈ Trade Volume: 8.6 billion USD
◈ South Sudan’s independence
=> Sudan lost ¾ oil production,
trying to boost exports in agriculture
◈ China & Sudan signed up to set up
an agricultural trade zone
20112011
20122012
20102010
Mid-
1990s
Mid-
1990s
Oil
Low
Interest
Loans,
Weapons
By Hana Jin
9. Trade Policies
• China’s unilateral tariff preferences. Duty-free access to
95 percent of imports from LDCs including Sudan.
Table 1.0 Sudan Faces Mostly Low Tariffs in Major Export Markets
Importing Country Simple Weighted Maximum Coefficient Share Tariff
Average Average Rate of variation Non-deductibals Year
China 7.7 0.32 40 77 97 2006
European Union 0 0 0 95 2006
India 13.6 15.4 30 48 5 2005
Indonesia 3.3 0.1 20 169 98 2001
Japan 2.6 0 29.8 436 100 2006
Korea 35.1 20.1 630 152 1 2006
Saudi Arabia 0 0 0 100 2006
MENA average 1.2 0.69 30 338 88 2006
SSA average 4.8 2.3 30 154 41 2006
Source: WITS calculations using UNCTAD TRAINS and UN Comtrade databases.
Notes: Averages are derived using traded products only. Calculations assume that all available preferences are
utilized and do not take into account tariff exemptions, duty-drawbacks, etc
By Peter Enos
10. • Open-door Trade and Investment Policy (Deng Xiaoping’s
rule) vs selective protection in foreign investment and
industrial policy targeting- Extensive government
subsidies
• Non-interference on domestic affairs of the partner state.
Trade sometimes driven more by foreign policy than
commercial considerations
• Engagement approach vs punitive approach
• Trade, FDI and aid- China agreed to write off $80 million
in Sudanese debt, and provide an interest-free
unconditional loan of $13 million for infrastructure
projects, including a new presidential palace; pledged $5.1
million for humanitarian aid for Darfur
Trade Policies
By Peter Enos
11. Sudan
• Mutual quality assurance policy; both imported and
exported commodities: Quality and Health standards
• Competition policy- Microcredit and business skills to
small and medium enterprises aimed to enhance
competition with Chinese business.
Trade Policies
By Peter Enos
12. Trade Policy: Implications
China
• Access to natural resources
exploitation due to (so-called)
mutual trust.
• Estimates state that nearly
400 million people have been
lifted out of poverty due to
trade over the last 25 years.
Sudan
• Exporters benefit from tariff
preferences
• An increase in volume of trade
in non-oil exports
• Consumer surplus
• Political stability, governance
and human rights in a
deadlock?
By Peter Enos
16. • Sudan’s export volume to China
By Sophea Sok
Trading Commodities
17. • Arms Trade
• China is also Sudan’s main supplier of arms and has big interests in
railways and other Sudanese ventures.
By Sophea Sok
Trading Commodities
19. •Arms Trade
• The first reported shipment of Chinese arms to Sudan appeared under the rule of
Sadiq al-Mahd (1986–89).
• Arms deliveries from China to Sudan
• China
• Military weapons and small arms from China to Sudan were valued at
USD 1 million in 2002 rising to USD 23 million in 2005.
• USD 57 million worth of aircraft equipment was transferred to Sudan between
2003 and 2005.
• Ammunition, high altitude bombs,
• Tanks and military trucks,
• Helicopters, and fighter aircraft.
• Appears to have become Sudan’s largest seller of
weapons just prior to the onset of the Darfur conflict.
• Arms sales to Sudan since 2004 account for 90% of small
arms present in the country, and
• Provision of training, transport vehicles and aircraft
have also added to the Sudanese arsenal.
By Sophea Sok
Trading Commodities
21. About Terms .Of .Trade
• Is the value of a country’s exports relative to that
of it’s imports. It is calculated by dividing the
value of exports by the value of imports, then
multiplying the result by 100%.
Measurement is recorded in an index, for economic monitoring.
By Fatima Ibrahim
22. Less than 100%
If a country’s terms of trade is less than 100%, it
means that there is more capital going out to buy
imports than there is coming into the country.
It is often important to know why exports increase relative to
imports, especially since the terms of trade are directly impacted by
changes in export and import prices.
By Fatima Ibrahim
23. Greater than 100%
A result greater than 100% means the
country is accumulating capital i.e.
more money is coming in from exports.
Using terms of trade to determine the health of a
country’s economy can draw the wrong conclusions.
By Fatima Ibrahim
25. If we must trade…
• Trade will only take place if the
terms of trade lie within the
opportunity cost ratios of
production for both countries.
By Fatima Ibrahim
29. Assumptions
It is assumed that due to the ff reasons the terms
of trade(earnings)index will remain inconsistent
in terms of improvement & deterioration
between the two countries due to : -
• Constant price fluctuation in the global oil
market
• Foreign exchange rate increase or decrease.
• Depreciation or appreciation in their stocks most
especially for Sudan’s case coming from a fragile
status of War and Separation.
By Fatima Ibrahim
30. Challenge of Trade
• After Secession of
South Sudan,
Sudan doesn't
have much oil to
trade
By Sabin S. Chaudhary
31. • Conflict:
▫ Between South
Sudan and
Sudan
▫ In Darfur Area
▫ Rebel groups
Challenge of Trade
By Sabin S. Chaudhary
32. • Sudan has been trying to boost exports of agricultural
products and livestock.
Sudan: Share of agriculture in GDP Source: CIA factbook
Challenge of Trade
By Sabin S. Chaudhary
33. • When investment activities carry with them labor-
intensive components (building and construction).
Chinese labor is largely involved.
Challenge of Trade
By Sabin S. Chaudhary
34. Opportunities
• China should serve as a Peace Broker for the conflict
between the two Sudan countries to prevent full-fledged
war
▫ Reducing its arms shipments to the region
▫ Human Rights
• Market Expansion: Free Trade Zone for Agriculture
products and livestock to boost bilateral transactions
• Diversification into Mining such as gold
By Foster Abogye Gyamfi
35. Opportunities
• Petrochemical Industry
• Financial Institutions
• Economic Infrastructure
▫ Transportation System: Railway ($ 1.15bn)
▫ Airport Expansion
▫ Telecommunication
▫ Sea Port Expansion
• Capacity Building
▫ Research Center
▫ Education Institution
By Foster Abogye Gyamfi
36. Economic Gains
• Oil Fees:
▫ 2013 $500mn
▫ 2014 $2bn
• Transit for Goods
By Foster Abogye Gyamfi
37. Conclusion
• China helped addressed the issue of the oil fee impasse
between North and South Sudan primarily through
diplomacy
• China was the first country to supply troops to the UN
Mission in Darfur (UNAMID)
• South Sudan is to receive US$8 billion loan
▫ Earmarked for road, hydropower, infrastructure and
agriculture projects
By Foster Abogye Gyamfi
38. Conclusion
• Sudan had served as bridgehead for China into Africa oil
market
• Sudan has been a major recipient of Chinese foreign aid,
due to the good political relations between the two
governments
• What is your thought of China’s Trade as against Human
Rights violations?
39. Reference
• Energy Information Administration (EIA), “Sudan and South Sudan,”
Country Analysis Briefs (updated March 19, 2012),
http://www.eia.gov/cabs/Sudan/
• www.thediplomat.com/china.../no-strings-attached-evaluating-chinas-
trade- relations-abroad
• International Crisis Group (ICG), “China’s New Courtship in South
Sudan,” Africa Report No. 186 (2012): 2
• https://www.cia.gov/library/publications/the-world-factbook/geos/od.html
• Riek Machar, “South Sudan: A History of Political Domination – A Case
of Self-Determination,” University of Pennsylvania – African Studies
Center, (1995),http://www.africa.upenn.edu/Hornet/sd_machar.html;
Peter Woodward, “Towards Two Sudans,” Survival: Global Politics and
Strategy 52, No. 3(2011): 5.
• Associated Press, “Sudan says it ran South Sudan troops out of border oil
town; South Sudan announces withdrawal,” Washington Post, April 20,
2012
By Foster Abogye Gyamfi
Revitalizing Sudan’s Non-Oil Exports: A Diagnostic Trade Integration Study (DTIS) Prepared for the Integrated Framework Program December 2008
China’s trade policies must be seen in the context of the domestic economy and its political arrangements, and also in the context of China’s rising geopolitical power. Unreported and extensive government subsidies
China is predicted to be the world’s biggest economy by 2050 and be the largest trading nation in the world.