China's tariff removal for 53 African nations boosts trade and yuan use, with significant growth in yuan-denominated transactions, reports Reuters.
China's removal of tariffs on imports from 53 African nations is spurring trade growth and encouraging wider adoption of the yuan, reports Reuters.
Customs data show that China-Africa trade rose nearly 18 percent last year, with tariff cuts in May expected to lift trade flows and yuan-denominated settlements. The International Monetary Fund has found that yuan usage rises with exposure to Chinese trade, while Beijing has announced new measures to promote the global adoption of its currency.
African exports ranging from Nigerian cattle bone pellets to Kenyan avocado oil are increasingly being shipped to Chinese ports, boosting demand for yuan settlement. Standard Chartered Kenya's chief executive, Birju Sanghrajka, stated that yuan transactions are growing but remain complementary to the dollar.
South Africa's Standard Bank connected to China's Cross-Border Interbank Payment System in November, processing $500 million in just four months. Bank officials indicated that transactions were driven by import and export activity, with plans to expand CIPS access to more African countries.
China's commerce ministry stated that tariff removals aim to support African exports amid global protectionist pressures. Kenyan banks have begun issuing yuan-denominated letters of credit, helping customers avoid dollar conversion costs.
The African Export-Import Bank, Ecobank, and Bank of China are preparing yuan settlement products. Ecobank's chief executive, Jeremy Awori, mentioned that China is building payment rails that could make transactions almost instantaneous.
Kenya last year converted three Chinese railway loans from dollars into yuan, saving about $215 million annually in interest. Zambia has also begun accepting mining royalties in yuan to bolster reserves and service debt to China.
China's yuan-denominated imports and exports rose 14 percent in April to CNY4.38 trillion (US$647 billion). Kenyan avocado exports to China have surged from 10 containers a week in 2022 to about 200, with volumes projected to reach 1,000 by 2030. Sunripe managing director Thiku Shah stated that yuan invoicing could accelerate trade growth.
