The Global China Bubble
African Exports to China Plummet

China’s economic crisis has devastated commodities exporters across the subcontinent, according to the BBC:

Presenting China’s trade figures for last year, customs spokesman Huang Songping told journalists that African exports to China totalled $67bn (£46.3bn), which was 38% down on the figure for 2014.

BBC Africa Business Report editor Matthew Davies says that as China’s economy heads for what many analysts say will be a hard landing, its need for African oil, metals and minerals has fallen rapidly, taking commodity prices lower.

There is also less money coming from China to Africa, with direct investment from China into the continent falling by 40% in the first six months of 2015, he says.

Earlier this week, our own WRM noted in a must-read essay that there are really two China bubbles: the domestic one (which is itself really several bubbles at once) and the global one that was inflated over the past fifteen years by strong and growing Chinese demand. Companies and states around the developing world put a great deal of money and time into assets based on the expectation that China would continue to buy more and more raw materials every year.

Even if China manages to slow its fall, it won’t be as hungry as it used to be which means the billions of dollars of mines and forests and oil fields in Africa and South America and Asia are now of far less certain value. Moreover, the deals for those investments have often been structured, traded on, and insured in Western capitals. Almost everyone is exposed to the Global China Bubble, and markets are panicking because few investors have any clue what this will mean or how it will be stabilized. If China no longer supports robust economic growth in developing countries around the world, who will?

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