Hunan-Africa trade eyes solid boost with major plans for logistics backing

Central China's Hunan province will build a number of trade and logistics support platforms to further enrich China-Africa business cooperation over the next five years, said a government official on Thursday.

As the host venue for the China-Africa Economic and Trade Expo, Hunan will build six functional centers and hubs, including a trade center for non-resource products, a China-Africa cross-border renminbi settlement center and a logistics hub to broaden channels for African products to enter China in the coming years, said Shen Yumou, a delegate to the 20th National Congress of the Communist Party of China, and also director-general of Hunan's provincial department of commerce.

In addition to starting preparations for the third edition of the China-Africa Economic and Trade Expo, the province has conducted trials of local currency settlement to help African countries ease the pressure of cross-border settlement due to foreign exchange shortages.

After completing 12 small-scale barter deals with four African countries since 2021, Hunan — backed by favorable policies of the China (Hunan) Pilot Free Trade Zone — has proposed a pilot plan for local currency settlement for trade with African countries in an effort to build the China-Africa cross-border renminbi settlement center in Central China.

The province is currently carrying out spot foreign exchange settlement and sales transactions with public sectors from six African countries — South Africa, Nigeria, Ghana, Kenya, Botswana and Zambia.

Spot foreign exchange settlement and sales refer to activities in which banks, at the request of a customer, convert renminbi into a designated foreign currency, or vice versa, at the quoted exchange rate on the day of conversion.

"These moves will expand China's imports of African products, and encourage more Chinese companies to conduct business with their African counterparts," Shen said.

Considering the soaring demand for Chinese goods, the government will assist capable companies in Hunan to build overseas warehouses in key ports and cities in Africa to ensure sufficient goods supplies during the peak season and boost sales from cross-border e-commerce business, Shen added.

More than 2,600 companies in Hunan have conducted foreign trade activities with Africa to date, according to Changsha Customs, a local unit of China's General Administration of Customs.

Hunan's foreign trade with African countries jumped 45 percent on a yearly basis to 35.95 billion yuan ($4.97 billion) in the first eight months, while its imports of agricultural products from Africa soared 77.4 percent to 32.89 million yuan, Customs data showed.

After launching its first direct passenger flight to Africa, which flew from the provincial capital of Changsha to Kenya's capital Nairobi in 2019, and the first Hunan-Guangdong-Africa combined sea-rail transport service last year, Hunan saw a new international air cargo route linking Changsha and Addis Ababa, Ethiopia begin operating in late July.

The air cargo route, the first between Hunan and Africa, is operated by Ethiopian Airlines, with two flights using Boeing 777 all-cargo aircraft each week.

The route meets the growing demand from Hunan companies for expanding the market in Africa, said Zhou Jun, vice-president of Changsha-based Hunan Airport Supply Chain Management Co Ltd.

"At present, the two freight flights, operating each week, are fully loaded. They mainly carry clothing, mobile phone accessories, mechanical parts and laptops to Africa," Zhou said.

Bolstered by the complementary trade structure, tangible growth of the Belt and Road Initiative and strong business ties, total trade value between China and Africa grew 16.1 percent year-on-year to $189.71 billion from January to August, while Africa exported $82.96 billion worth of goods to China over the period, up 19.8 percent on a yearly basis, the GAC said.