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The China shock has arrived in Africa, and America’s economic relationship with the world’s fastest-growing continent is at stake.
America’s own China shock is well documented. Beijing’s entry into the World Trade Organization in 2001 lowered economic barriers. This unleashed a wave of cheap manufactured exports that hollowed out American factory towns and led multiple administrations to impose escalating tariffs on Chinese goods.
The aftershock is now spreading. The same dumping dynamic — Chinese goods exported at below production costs — that shook America’s industrial Midwest, is hitting home in Europe, Latin America, Southeast Asia, and above all, Africa. Chinese import penetration there is rising faster than anywhere else on earth. Across the continent’s major markets — Egypt, Kenya, Nigeria, South Africa — Chinese goods are capturing market share in textiles, steel, autos, machinery, and electronics, and the effect is evident. Manufacturing’s share of GDP across much of Sub-Saharan Africa has stagnated at under 13 percent as Chinese import shares climb.
In contrast to what happened in the United States, where Chinese goods caused labor market shocks in specific geographies, subsidized Chinese exports are killing African manufacturing in the crib. Local industries are being denied the opportunity to scale up and provide the middle-class job opportunities the population needs, and the timing could hardly be worse. By 2040, Africa’s working-age population is projected to exceed that of India and China combined, and finding opportunities for those workers will be Africa’s primary security challenge for years to come.
So why hasn’t Africa protected itself? Partly because there’s less to defend — Africa doesn’t have a major industrial constituency demanding protection. But the bigger constraint is debt vulnerability. Beijing is Africa’s largest creditor, and that debt dependency limits both the fiscal space for subsidies for homegrown industry and the political room for tariffs. You cannot easily impose tariffs on the same country that is restructuring your loans or financing your ports and railways. Moreover, because African economies are relatively small on their own, no single head of state will want to confront China for fear of facing retaliation on their own.
The African Continental Free Trade Area offers a way around that asymmetry. Acting as a bloc rather than 50 separate economies, African governments could harmonize external tariffs, coordinate infant-industry protections across borders, and create a regional market large enough to make local manufacturing genuinely viable. Scale and unity are what can give Africa more space to push back against Beijing on both debt dependency and dumping.
Chinese goods flooding Africa is also an American problem: If Chinese goods continue to flood African markets, American exporters and local industry alike will be crowded out, too. A key starting point is greater U.S. engagement with the free trade area.
It is imperative that Washington gets it right, since whoever shapes the bloc’s rules will hold significant power over who gets to sell into that market. China has already moved to fill that role: it has positioned itself as a leading technical partner to Africa, advising on the bloc’s rules for intellectual property rights, investment, competition policy and digital trade. The United States needs to get its own advisers into those technical discussions. The State Department should use the newly announced U.S.-Africa Strategic Investment Program to fund this as quickly as possible.
None of this will work, though, without decoupling debt structuring from continued dependence on opaque China-linked infrastructure financing. African finance ministers need alternative lenders and refinancing mechanisms that don’t come bundled with commitments to Chinese contractors and equipment. One problem is that the U.S. International Development Finance Corporation — America’s largest development finance entity — has grown so narrowly focused on critical minerals and national security that it is missing opportunities to advance America’s long-term economic security in Africa.
The U.S. International Development Finance Corporation needs a mandate to innovate: to design new instruments that pull passive, return-seeking American capital into African infrastructure at real scale. U.S. mutual funds and exchange-traded funds alone held nearly $45 trillion in assets — even a sliver of that pool would close Africa’s infrastructure financing gap. This administration, stocked with veterans of Wall Street and the capital markets, is well placed to build that kind of bridge — if it chooses to point that expertise at Africa.
The first China shock reshaped America’s politics, economics, and even society. Its aftershocks will determine Africa’s economic future.
Daniel Swift is a senior research analyst for economics, finance, and trade for the Center on Economic and Financial Power at the Foundation for Defense of Democracies, where Cameron Timlin is an intern. Swift is a retired U.S. diplomat and was mostly recently the Acting Coordinator for Prosper Africa.
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