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1. Introduction
In the past three decades, China has re-emerged as a major producer in the global economy and is rapidly regaining its place as the world’s largest producer which it held until the nineteenth century[1]. In 2012, China was ranked second after the USA in terms of gross domestic product (GDP) (nominal figures) and second as a trading nation[2]. Over the past decade, the real GDP for China has grown in real terms by more than 8 per cent per annum, on average, while the expansion of its exports grew at an annual average rate of 21 per cent since 2000. China’s re-emergence and its rapid growth as a trading nation can mainly be explained by its use of trade and industrial policies which complemented its accession to the World Trade Organization[3]. The sheer size of the economy has also played a role in attracting investment to China.
China’s rapid economic growth has also generated enormous improvement in the economic performance of many countries, in particular those that have developed a strong commercial relationship with China. Countries have benefited significantly from both lower costs of intermediate and capital goods and from the higher prices of basic commodities exported to China. The trade relationship has also had negative effects on those countries which compete with China’s exports, especially in third export markets (Lopez et al. (2008)). Thus, the trade relationship between China and its trading partners has resulted in economic gains and losses. China has provided a growing market for the exporters of primary commodities and has also contributed to a price boom for many of these primary commodities, boosting export growth in a number of developing countries (Farooki and Kaplinsky, 2012). In the case of Africa, the engagement with China has contributed significantly to its export growth (Wang and Tchane, 2008). Between 2001 and 2012, Africa’s exports to China rose, on average, by more than 30 per cent, while Africa’s exports to the rest of the world (ROW) rose, on average, by less than 15 per cent. Beneficiaries of the export growth are mainly countries with a trade structure which does not overlap with that of China (Renard, 2011) (Lederman et al., 2006). Most of these countries’ main exports are raw materials such...