China’s economic policy uncertainty and trade flows between China and her six largest trading partners in Sub-Saharan Africa: an asymmetric analysis

Abstract

Purpose The purpose of this study is to investigate how China’s economic policy uncertainty (CEPU) affects trade dynamics between China and Sub-Saharan Africa (SSA). This is particularly critical given that China has surpassed the USA to become Africa’s leading trade partner. Design/methodology/approach Using a nonlinear autoregressive distributed lag framework, the study investigates the asymmetric effects of CEPU on trade with six selected SSA economies – South Africa, Nigeria, Kenya, Angola, Tanzania and Ghana – over the period 2000Q1 to 2022Q4. The authors also analyse the asymmetric impact on imports from China into these economies. Findings The study finds that in the long run, both rising and declining CEPU levels promote Chinese trade with Kenya, Ghana and Tanzania, though only Ghana sees significant import gains. In the short run, rising and declining CEPU similarly tend to boost trade flows from China. However, only rising CEPU exerts a significant positive effect on imports in Ghana, while the impact of declining CEPU on imports remains largely negligible. Policy implications arising from these findings were discussed. Originality/value The study, unlike previous studies, examines how CEPU is influencing trade flows between China and her six largest trading partners in SSA. It also investigates whether these trade flows respond asymmetrically to increases and decreases in CEPU.