bilateral trade between china and sudan
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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
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ContentsI. 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
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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
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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
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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
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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
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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
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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
2011 2011
20122012
20102010
Mid-1990sMid-
1990s
Oil
Low InterestLoans,
Weapons
By Hana Jin
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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
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• 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
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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
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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
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By Sophea Sok
Trading Commodities
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Exports $11.67 billion (2008 est.)
Imports $8.229 billion (2008 est.)
Exports – commodities
oil and petroleum products; cotton, sesame, livestock, groundnuts, gum Arabic, sugar
Exports – partners China 49.8%, Japan 33.4%, Indonesia 5.5% (2008)
Imports – commodities
foodstuffs, manufactured goods, refinery and transport equipment, medicines and chemicals, textiles, wheat
Imports - partners China 20%, Saudi Arabia 8.4%, UAE 6.2%, India 6.1%, Egypt 5.5%, Italy 4.1% (2008)
By Sophea Sok
Trading Commodities
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•Sudan Trade with China
By Sophea Sok
Trading Commodities
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• Sudan’s export volume to China
By Sophea Sok
Trading Commodities
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• 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
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•Arms Trade
By Sophea Sok
Trading Commodities
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•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
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Terms of Trade
FATIMA IBRAHIM
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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
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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
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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
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Effects of T.o.T
By Fatima Ibrahim
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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
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Price may fluctuate
By Fatima Ibrahim
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Improving & Deteriorating T.O.T
By Fatima Ibrahim
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Terms of trade index
By Fatima Ibrahim
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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
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Challenge of Trade
• After Secession of South Sudan, Sudan doesn't have much oil to trade
By Sabin S. Chaudhary
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• Conflict:▫Between South
Sudan and Sudan
▫In Darfur Area▫Rebel groups
Challenge of Trade
By Sabin S. Chaudhary
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• 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
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• When investment activities carry with them labor-intensive components (building and construction). Chinese labor is largely involved.
Challenge of Trade
By Sabin S. Chaudhary
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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
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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
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Economic Gains
• Oil Fees:▫2013 $500mn▫2014 $2bn
• Transit for Goods
By Foster Abogye Gyamfi
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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
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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?
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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
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Thank you.