Red hurricane on trade balance

Jo-Maré Duddy – China has claimed the top spot for third consecutive time as Namibia’s export destination in the first three months of 2019.In addition, Namibia has recorded a trade surplus with the super power for the sixth consecutive quarter.The latest figures released by the Namibia Statistics Agency (NSA) show that for every N$4 Namibia registered as export earnings in the first quarter of 2019, N$1 was generated by the Chinese market.Total exports to China in the past quarter were nearly N$5.44 billion, about N$1.98 billion or around 57% more than the first quarter of 2018.Namibia has seen a massive increase in exports to the eastern giant in the first quarters since 2014, when only about N$343 million worth of goods were destined for the Chinese market. In just five years, exports to China has skyrocketed by some 1 485%.At the same time, imports from the country in the first quarters have dropped sharply – peaking at N$1.8 billion in 2018 during the five years under review. Namibia imported goods worth N$859 million from China in the past quarter.China only became one of Namibia’s top 10 export destinations in the third quarter of 2017. Exports to the country first burst through the ceiling of N$1 billion then.SurplusNamibia recorded a trade surplus with China in the first quarter of this year, with exports exceeding imports by about N$4.6 billion.This is the biggest consecutive surplus since Namibia moved into positive trade balance territory with China in the last quarter of 2017. Namibia’s trade surplus with the country has been growing rapidly since the last three months of 2017, when it was a mere N$195 million.2018 was the first year that Namibia recorded an annual trade surplus with China – exports exceeded imports by more than N$10 billion and the country was Namibia’s most important export market.In 2017 – when China was only the fourth biggest export destination - Namibia still reported a trade deficit of nearly N$1.3 billion with the country.Resource hungryCopper, zinc and ores – but especially copper - drive China’s insatiable appetite for imports from Namibia.In the past quarter, about N$3.3 billion or 61% of all exports to China was copper. Ore exports totalled nearly N$1.9 billion, followed by zinc with N$141 million.Compared to the first quarter of 2018, copper exports rose by about 60%, while zinc and ore exports were up 50% and 574% respectively.The NSA’s 2018 annual trade report clearly illustrates China’s growing importance as a copper export market. In 2017, Namibia exported no copper to China. Last year, the commodity was Namibia’s no.1 export product to the industrial giant with nearly N$9.8 billion worth of copper making its way to China. This represents about 60% of Namibia’s total exports to the country in 2018.According to Reuters, China accounts for nearly half of global copper demand estimated at about 24 million tonnes this year.Nearly N$5.96 billion worth of ores from Namibia was destined for China, up 233% from 2017. Ore exports consisted mainly of uranium, followed by a small percentage of zinc and other ores.Trough state-owned enterprises, like China National Uranium Corporation Ltd (CNUC), China owns 90% of Swakop Uranium’s Husab uranium mine, as well as 25% of the Langer Heinrich mine, currently on care and maintenance. Rio Tinto has also agreed to sell its entire stake of 68.62% in Rössing Uranium Ltd to CNUC. The transaction is pending regulatory approval.Zinc exports in 2018 jumped by 69% on an annual basis, totalling N$311 million. Natural minerals and stones were the fourth most important export product to China, earning Namibia N$164 million – 27% more than 2017.Re-exportsNamibia has to rely on re-exports to meet China’s demand for especially copper.China was Namibia main re-export partner last year.Nearly N$9.78 billion of copper was re-exported to the country, while zinc re-exports amounted to N$21 million.In the first quarter of 2019, China kept its position as re-export market of choice. Total re-exports to the giant exceeded N$3.28 billion, an increase of 55% compared to the first three months of 2018.Nearly N$3.27 billion worth of copper was re-exported to China.ImportsDuring the quarter under review, China was Namibia’s fifth biggest import market. About N$859 million worth of Chinese goods landed locally, 52% less than the first quarter of 2018.Last year, China was Namibia’s third biggest import market. Imports from the country totalled nearly N$6.3 billion or 6% of Namibia’s total imports. Compared to 2017, Namibia imported 36% less from China.Industrial machinery (N$1.3 billion) was the most important import, followed by electrical machinery (N$1.1 billion).Other import products of interest were oils and mineral fuels (N$296 million), motor vehicles and parts (N$196 million) and plastics (N$139 million).Economic giantThe International Monetary Fund (IMF) this month concluded its annual Article IV consultations with China.The IMF expects economic growth in China to moderate to 6.2% and 6.0% in 2019 and 2020, respectively. The government’s planned policy stimulus will partially offset the negative impact from the recent US tariff hike on US$200 billion of Chinese exports, it said.“Uncertainty around trade tensions remains high and risks are tilted to the downside,” the fund concluded.The IMF’s first deputy managing director, David Lipton, said growth is expected to gradually slow to 5.5% by 2024 as the economy moves towards a more sustainable growth path.Lipton said no additional policy easing is needed, provided there are no further increases in tariffs or a significant slowdown in growth. “Exchange rate flexibility should increase to facilitate adjustment to the new external environment. However, if trade tensions escalate further, putting at risk economic and financial stability, some additional policy easing would be warranted,” he said.“The global economy would benefit from a more open, stable, and transparent, rules-based international trade system,” Lipton added. “China and its trading partners should work constructively to address shortcomings in the trading system and enable a system that can more readily adapt to economic changes in the international environment. China can also play an important role and benefit from further opening up and other structural reforms that enhance competition. “’Trade tensions between the US and China should be quickly resolved through a comprehensive agreement that supports the international system and avoids managed trade,” Lipton said.

Red hurricane on trade balance

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Namibian Sun 2025-06-02

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Red hurricane on trade balance

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Namibian Sun 2025-06-02

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