How trade helped China outpace the U.S. in the struggle for influence in this tiny Horn of Africa country

  • N.B. Notes about project, methodology etc are at the bottom of the piece

NEW YORK — China took advantage of a global recession to outwit the U.S. and establish a long-term robust partnership with the tiny African state of Djibouti in a high-stakes geopolitical struggle, trade records show.

According to a combined trove of data from the China-Africa Research Initiative at John Hopkins University and Cape Town-based think-tank Trade & Law Centre (TRALAC), China has been the biggest exporter to Djibouti since 2007 — a source of worry to American policymakers.

But Djibouti has also become “a touchstone in the debate over Beijing’s expanding global aims”, says Zack Vertin, foreign policy analyst and senior advisor to the U.S. Ambassador to the UN. “The combination of Chinese commercial and strategic expansion has generated concern in U.S. national security circles and spotlighted the Red Sea as a potential theater of great power competition.”

For decades, Djibouti, with an estimated population of 876,000, was used to being ignored, forgotten even. But its political stability in a volatile region and strategic location at the entrance to the Red Sea, the nexus of both Africa and the Middle East, has attracted the attention of the world’s economic and military superpowers.

N.B. Numbers are in billions of dollars.

It is the only one on Earth that has both Chinese and American military bases, but at least half a dozen other military bases have been established there by former colonial masters France, Italy, Spain, Japan, and most recently Saudi Arabia. Of all of them, it is China that is reaping the most rewards, having taken advantage of an evident gap.

In the aftermath of the 2008–2009 global crisis, a massive stimulus package from the Chinese government helped revive its economy quickly, says Yu Yongding, a former member of the Monetary Policy Committee of the People’s Bank of China. This helped the country spread its tentacles outwards faster, while the West battled for survival and tempered its investments.

Since then, China has been Africa’s largest trading partner. It has also replaced the EU as Djibouti’s top trading partner outside the continent, displacing century-old trade dynamics that have been in place since the latter’s colonial existence as French Somaliland. Furthermore, it has outpaced the U.S., which has a prominent interest in the region’s sociopolitics because of the Middle East nearby.

Chart 2: Differentials over a decade, in exports between China, EU and U.S. to Djibouti. Made with Flourish.

N.B. Numbers are in billions of dollars.

By 2013 when China engineered One Belt One Road, a global infrastructure development policy, that blossoming relationship had already been cemented, leading to its involvement in the construction of a railroad from Djibouti to the Ethiopian capital Addis Ababa as well as a new airport and seaport. This January, it broke ground on a free trade zone expected to provide unemployment to over 15,000 Djiboutians.

“One of the reasons I think this has happened is due to the inability to connect the economic importance and opportunities of trade to Africa for middle America,” explains Toyin Awesu, spokesperson for Prosper Africa, one of two recent US government initiatives to counter Chinese development influence. “The Chinese business person in China “gets it” but we can not say the same for a lot of business owners in the US. Thus the decline.”

The increased trade volumes have also resulted in Beijing launching a naval base — its first foreign military base — and logistics facility there in 2017, deepening Washington’s worries.

Djibouti’s major trade partner remains landlocked Ethiopia which has primarily depended on the port in its tiny neighbor due to sour relations with Eritrea — both nations reconciled in a landmark 2018 peace agreement — and civil war in Somalia, its other option.

Other partners are in the regional economic blocs Djibouti belongs to: the Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC), Intergovernmental Authority on Development (IGAD), and Community of Sahel–Saharan States (CEN-SAD).

But as the toss-up between the world’s two biggest economic superpowers continues in the Horn of Africa, China has become just as important to Djibouti as its neighbors. It is now being factored into geopolitical calculations in the region, having carefully wedged itself into the trade permutations in the region.

Experts say the recent pandemic-inspired recessions across the world are giving China another opportunity to double that gap between it and the U.S.

To begin the long process of reversing that the latter needs “a strategy that is both purposeful and nuanced”, says Hal Brands, professor at Johns Hopkins University’s School of Advanced International Studies. “[It] should balance its negative message — about the long-term costs of dependence on China — with a more positive one that depicts Djibouti and the African continent as something more than an arena for rivalry.”

DATA STUDIO NOTES

Methodology:

Data used, dates back to 2016 sadly, because of the following reasons:

  • While the SAIS source gives data for both US and China from 1992–2019, the dataset does not include trade volumes between the EU and individual countries.
  • The TRALAC dataset contains only trade volumes between 2006–2016
  • Other sources of data show US/EU trade volumes with African regions, not individual countries. Since Djibouti belongs to 4 regions, isolating it or even the Horn of Africa, is quite complex.

Data:

  1. US & China trade — John Hopkins University’s China-Africa Research Initiative: http://www.sais-cari.org/s/TradeData_08Jan2021.xlsx
  2. EU trade — Trade Law Centre (Cape Town-based think thank): https://www.tralac.org/documents/publications/trade-data-analysis/903-eu-africa-trading-relationship-synopsis-july-2017/file.html
  3. https://docs.google.com/viewer?url=https%3A%2F%2Fwww.tralac.org%2Fdocuments%2Fpublications%2Ftrade-data-analysis%2F902-eu-africa-trade-data-july-2017%2Ffile.html%3Fforce_download%3D1%26auth_token%3DeyJ0eXAiOiJKV1QiLCJhbGciOiJIUzI1NiJ9.eyJzdWIiOiJlZ2JlanVsZWUiLCJpYXQiOjE2MTg2MTc0ODEsImV4cCI6MTYxODcwMzg4MX0.bB494AbrylP3OXeHUXWf_ab2kC2nw__oV5Zgsf3Rsmo

Background:

For my project, I’m looking at the change patterns in trade between China and African countries over the last two decades, in comparison to that between the U.S. and African countries.

The focus is on the Horn of Africa which is just off the easternmost tip of the continent strategic in a geopolitical manner for the US, China, and Middle Eastern powers. It comprises Djibouti, Eritrea, Ethiopia, Somalia, and its semi-autonomous regions (Puntland and Somaliland), but this report will only consider Djibouti, Eritrea, and Somalia as part of the region. This is because Puntland and Somaliland aren’t officially recognized by the UN and so no official trade is recorded (this data is initially from the UN Comtrade database). Eritrea has sanctions imposed on it because of its status as a pariah state.

So I chose Djibouti.