Analyzing the Evolution of China-Africa Economic Integration: A Wavelet Approach

Abstract

This study analyzes the evolution of Africa's degree of economic integration with China from 1993 to 2019. The study period encompasses a number of China-Africa bilateral economic treaties, which the literature claims are prolific and have significantly strengthened Africa's degree of economic integration with China. We develop a theoretical argument that, if this assertion holds, the integration indicator must reflect a long-run upward trend that is less obstructed by noise. To validate this argument, we use a wavelet approach and find no evidence necessitating failure to reject the null hypothesis of no periodicity, suggesting that the integration indicator was statistically noisy over the study period. This finding suggests that interpreting the evolution of China-Africa economic integration primarily through bilateral economic pacts can be deceptive. The interpretation should instead be exploratory in nature to unpack some hidden motivations associated with this integration. Our preliminary investigation revealed that the Angola Model is primarily driving China-Africa economic integration. Therefore, it is plausible to argue that China-Africa economic integration is perpetuated to exploit natural resources rather than to enhance hard infrastructure development in Africa, as purported in the literature.