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Bilateral Trade; China; Cameroon; Opportunities; Challenges. 1

MBA THESIS

A Study of Trade Openness to China: Opportunities and Challenges in Cameroon


ACKNOWLEDGEMENTS


ABSTRACT

Trade is a means of increasing connectivity between nations. Due to globalization countries,

investors, companies, and governments are interested in increasing linkages with multiple

nations so that they can obtain cross country advantages. This is important because some nations

have a competitive advantage in one area while others have the same benefit in another segment

so trade activities can help in leveraging resources and providing maximum benefit to the trading

partners. Cameroon has many opportunities for investment in diverse sectors such as oil & gas,

agriculture, infrastructure, etc. but it does not possess stable trade relations with developed

economies like China. This paper will help in providing a framework through which the country

can maximize on some of the opportunities and combat with challenges to attain its trade

development goals. The specific research question will be answered with the help of following

objective: The inductive approach has been used for this research study. The inductive approach

will help in making inferences from the collected information and analyzing them in the context

of overall relations between China and African countries. Data collection has been done using

secondary sources. The data collected from secondary sources has been obtained from reputed

journals, books and credible online sources. The detailed data collected, in-depth analysis,

findings / outcomes, insight and suitable recommendations are provided in this thesis


TABLE OF CONTENTS

ACKNOWLEDGEMENTS 2

ABSTRACT 3

LIST OF FIGURES 5

LIST OF TABLES 6

1. INTRODUCTION & BACKGROUND 7

1.1. RESEARCH BACKGROUND 7

1.2. AIMS & OBJECTIVES 24

1.3. RESEARCH QUESTIONS 24

1.4. LAYOUT & STRUCTURE OF THE THESIS 25

2. LITERATURE REVIEW 25

3. RESEARCH METHODOLOGY 48

4. DATA COLLECTION AND ANALYSIS 50

5. CONCLUSION & RECOMMENDATIONS 72

5.1. MAIN RESEARCH FINDINGS 72

5.2. LIMITATIONS OF THE RESEARCH 75

5.3. SUGGESTIONS FOR FURTHER STUDY 75

REFERENCES 76


LIST OF FIGURES

1. Figure 1 – Sectoral Contributions towards GDP – Cameroon 30

2. Figure 2 – Export Performances – Cameroon Q1 2013 to Q3 2013 31

3. Figure 3 – Quarter Wise Oil Production – Cameroon 33

4. Figure 4 – Share of Oil over GDP & Exports – 2011, A Comparison 34

5. Figure 5 – Selective Price Levels – year on year changes in per cent – 2007

till 2013 (Cameroon) 35

6. Figure 6 – Trade amongst China and Sub Saharan Africa 44

7. Figure 7 – Imports of Sub Saharan Africa from China 45

8. Figure 8 – Forecasts of Oil Price – 2013 – 2025 (as US Dollar for each

Barrel) 61

9. Figure 9 – Actual Vs Projected levels of GDP Growth Rates in

Comparison to Objectives of the Government – 2010 – 2020 64

10. Figure 10 – GDP Rate of Growth Essential for Attaining Government set

Objectives 64

11. Figure 11 – Distribution of Exports from Cameroon to China 67

12. Figure 12 – Distribution of the Imports by Cameroon from China 68


13. Figure 13 – Trends the Export & Imports

69

14. Figure 14 – Distribution of the Trade Balance amongst Cameroon & China 70

LIST OF TABLES

1. Table 1 – Balance of Payments, 2011 – 2013 as per cent of GDP – Cameroon 36

2. Table 2 – Exports from Sub Saharan Africa to China 47

3. Table 3 – Government Related Arrears & Other Obligations – 2011 – 2013

[Level at the end of year, as per cent of the GDP] 58

4. Table 4 – Execution of the Investment Budgets – Q1 to Q3 2013

[in CFAF Billions] 59


1. INTRODUCTION & BACKGROUND

1.1. RESEARCH BACKGROUND

Trade is a means of increasing connectivity between nations. Due to globalization

countries, investors, companies, and governments are interested in increasing linkages

with multiple nations so that they can obtain cross country advantages. This is important

because some nations have a competitive advantage in one area while others have the

same benefit in another segment so trade activities can help in leveraging resources and

providing maximum benefit to the trading partners.

The purpose and the mission of a group of 35 countries, OECD - Organization for

Economic Co-operation and Development is to stimulate economic growth, and progress

in the world trade activities, largely in an intergovernmental organization (Nordtveit,

2011; Humphrey, 2010; Nordtveit, 2009). The main framework is to provide assistance to

adopt, develop, and implement better policies for the governments to do better in life.

Implementing proper and collective global expertise, they combine the accumulated

knowledge and experience of a series of policy makers (Nordtveit, 2011; Humphrey,


2010; Nordtveit, 2009). They face global challenges designing truly global solutions for

improved policy options, while China plays a major development role taking keen

interest to design the OECD framework (Nordtveit, 2011; Humphrey, 2010; Nordtveit,

2009).

China - OECD collaboration has formed two way approach. All those OECD countries

are more concerned about smarter, innovative policies to foster and sustain greener

growth (Nordtveit, 2011; Humphrey, 2010; Nordtveit, 2009). Hence, the experience of

OECD member countries is more significant for China, as they have introduced them as

priorities in the future Five Year Plan of China’s energy efficiency program, social

protection, public service delivery, health care and education (Nordtveit, 2011;

Humphrey, 2010; Nordtveit, 2009).

Keeping China in Focus, they have learned to accept challenges, with two main

objectives.

1. It offers a clear snapshot indicating the prevailing understanding between OECD and

China by congregation analyses, concerning inequality, poverty reduction, foreign

trade and health care (Nordtveit, 2011; Humphrey, 2010; Nordtveit, 2009).

2. They share OECD policy information and experiences with China for improved skills

and greener growth (Nordtveit, 2011; Humphrey, 2010; Nordtveit, 2009).

China’s Global trading network and the main aspects of trade openness, has contributed

to their significant economic growth, with rapid expansion, and has helped them target


global markets. This specific research studies the considerable achievements in China’s

international trade and the overall economic growth (Nordtveit, 2011; Humphrey, 2010;

Nordtveit, 2009). Our research is based on the evolution, conception and advancement in

their international trade management and what kind of policies China has designed in

formatting trade sectors (Nordtveit, 2011; Humphrey, 2010; Nordtveit, 2009). Further,

the international trading accomplishments of China are extensively analysed, focusing on

the drastic economic growth by examining and evaluating the effects of productivity

improvement due to China’s international trade policies (Nordtveit, 2011; Humphrey,

2010; Nordtveit, 2009). Both non-parametric and econometric approaches are used. For

considering the econometric methodology, the main production function of stochastic

frontier is projected and also particular inefficiency in determinants in trade identified. In

case of non-parametric approach, every region / province Divisia index is planned and

measured as a benchmark (Nordtveit, 2011; Humphrey, 2010; Nordtveit, 2009). This

study establishes that ever-increasing global trade participation helped China reap

dynamic and static benefits, by invigorating quick economic growth of the nation. The

global trade structure and volume considering the high technological based exports have

resulted in positive regional productivity of China (Nordtveit, 2011; Humphrey, 2010;

Nordtveit, 2009). While the western and central regions of China are lagging behind in

productivity, international trade and economic growth, the eastern provinces are

progressing rapidly. China’s outstanding performance in economic growth can be traced

back to its increasing involvement in global trade and dynamic trade policy (Nordtveit,

2011; Humphrey, 2010; Nordtveit, 2009). The increased involvement in the world market

helped them reap dynamic as well as static trade benefits, helping rapid economic


growth. The dynamic effects are shown by improving TFP – Total Factor Productivity

Economic level, by performing human capital accumulation, and the static benefits

indicated by the enlarging capital good status embodying high technology (Nordtveit,

2011; Humphrey, 2010; Nordtveit, 2009).

Ever since China took the membership of WTO – World Trade Organization, in 2001,

their country demonstrated positive reforms in the field of productivity, Marketing,

technological advancement, business management covering a wide product range, as per

the financial service network that formulated the WTO agreement (King, 2013; King,

2010; Yang & Ma, 2015). China with their openness policy entered another brand new

phase. They formatted the strategy to enhance the national financial industry to encounter

new challenges and opportunities, which in turn have become the focus point of their

improved financial participation (King, 2013; King, 2010; Yang & Ma, 2015). They

researched the WTO openness covering the process and scope, in the external and

internal environment, measures of strategies implemented and became a major driving

force for all the financial institutions, professionals and scholars (King, 2013; King,

2010; Yang & Ma, 2015). By the process of SWOT analysis effects, the entire gamut of

the openness, opportunities and challenges China government and people encountered

and adopted can be evaluated (King, 2013; King, 2010; Yang & Ma, 2015). After

entering WTO, China committed to open three major industrial and commercial sectors;

Insurance, Banking and Securities (King, 2013; King, 2010; Yang & Ma, 2015). The

Financial Industry openness and the commitment of China covered four major

perspectives; Sub-Sector or Sector, National Treatment, Market Access and any other


added commitments (King, 2013; King, 2010; Yang & Ma, 2015). Concerning the

Market perspective process, they made commitments like shown below and this formed

the main scope and process of openness of Financial Market after China’s WTO entry

(King, 2013; King, 2010; Yang & Ma, 2015). China steadily developed and established

their unique brand name and formatted very cordial customer relationship management

system (King, 2013; King, 2010; Yang & Ma, 2015). China’s banking sector a large

database information construction project and set up a gigantic national and global

computer network, with the business process covering rural and urban areas (King, 2013;

King, 2010; Yang & Ma, 2015). Despite the rapid financial and banking growth, they

followed equally well with customer information and services, offering physical business

subsidiaries all across the country, absorbing more customers (King, 2013; King, 2010;

Yang & Ma, 2015).

The financial globalization benefits as well as risks entail a number of contagion and

crises. The overall financial globalization effect may be positive and helpful for the

future, while risks remain more dominant immediately after countries begin to liberalize

(King, 2013; King, 2010; Yang & Ma, 2015). As on date, only a few countries, firms and

sectors have taken the real advantages of globalization (King, 2013; King, 2010; Yang &

Ma, 2015). When the financial process turns global, governments start to lose policy

methods of instruments, increasing the scope and availability for global cooperation in

framing financial policies (King, 2013; King, 2010; Yang & Ma, 2015).


We understand that the financial globalization is the process of national and country local

financial system integration with global financial institutions and markets (King, 2013;

King, 2010; Yang & Ma, 2015). The integration needs the government to liberalize the

entire capital accounts and all the local financial sectors, and the Integration happens only

when the liberated economies encounter an added movement and association of cross-

country goods movements and the capital flow (King, 2013; King, 2010; Yang & Ma,

2015). The local borrowers actively participate with international lenders to create better

markets, making a substantial participation global financial intermediaries (King, 2013;

King, 2010; Yang & Ma, 2015). Even developing and developed countries take the active

role in the global financial process by actively participating, leading to increased

interconnection between the financial world by profound developing countries financial

participation and integration in the global financial sectors and markets (King, 2013;

King, 2010; Yang & Ma, 2015).

Though the openness to financial globalization contain many potential benefits, it carries

several risks. The stream of contagion and financial crises when countries liberalize the

financial systems, they integrate with the global financial markets. It may lead to

financial crises and volatility (Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013).

Although all the domestic factors remain the major crises determinants, there stand

various channels by which through financial crises in the global markets can be routed

(Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013). Firstly, both the domestic and

foreign investors from the country which liberalizes their entire financial system must


maintain the market discipline of lawful exercises (Cheng & Ma, 2007; Li, 2012;

Drummond & Liu, 2013). At the time when the economy closes, the domestic investors

can only monitor the flow of the economy, and instantly react to unhealthy fundamentals.

In such countries following open economies, the combined force of foreign and domestic

investors can create a crisis when the principles and fundamentals of business ethics start

deteriorating (Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013). Loyalty to the

country and the proper business norms is vital to maintain integrity of global market and

business, to gain sound fundamentals. Moreover, investors can turn over-optimistic, and

hence overreact, not particularly disciplining countries (Cheng & Ma, 2007; Li, 2012;

Drummond & Liu, 2013). Hence, adhering to fundamentals, can spark acute alterations in

the appetite for absorbing risks by investors (Cheng & Ma, 2007; Li, 2012; Drummond &

Liu, 2013).

Secondly, globalization can generate crises if the perfected financial flow in the

international markets is not clearly formulated or designed (Cheng & Ma, 2007; Li, 2012;

Drummond & Liu, 2013). The financial market imperfections can lead to herding

behaviour, generating bubbles, creating speculative attack, leading to crashes within

many things. Imperfection methods in the financial, global capital markets can generate

an acute problem also in the countries following clear and sound fundamentals (Cheng &

Ma, 2007; Li, 2012; Drummond & Liu, 2013). If the investors accept in certain exchange

rate, which is always has speculative currency rates, it can generate self-generated

balance payment crisis irrespective of market fundamental, which are called as the

Imperfections in deteriorating fundamentals (Cheng & Ma, 2007; Li, 2012; Drummond &

Liu, 2013). In this case, the moral hazards can create over borrowing syndrome, at the


time when the economies get liberalized while assurances are given by the implicit

guarantees by the government that can increase further crises (Cheng & Ma, 2007; Li,

2012; Drummond & Liu, 2013).

Thirdly, globalization can generate crisis and calamity because of many external factors

involved due to several imperfections in the global capital market, even in many

countries following a sound financial practices and fundamentals (Cheng & Ma, 2007; Li,

2012; Drummond & Liu, 2013). In case the country forms foreign capital dependency, a

sudden swing in the global flow of capital can generate acute financial problems with

economic downturns. Such shifts are not based on country fundamentals (Cheng & Ma,

2007; Li, 2012; Drummond & Liu, 2013). The external factors remain vital and the main

determinants of financial measures and capital flow in developing countries.

Specifically, the international interest rates remain a major determinant factor of Latin

America and Asian capital inflow, ever since 1990 (Cheng & Ma, 2007; Li, 2012;

Drummond & Liu, 2013). In case of the cyclical movement of economics in the

developed countries, the diversification, global drive in the major financial centre

investment, the regional effect happens to be the prominent global factors (Cheng & Ma,

2007; Li, 2012; Drummond & Liu, 2013).

The objective is to scrutinize how Opportunities and Challenges of China’s openness in

dealings with the production, distribution, goods consumption and services with the

theory and economic system management works so effectively for the economic self-

sufficiency and independence in the international financial services and how the global


financial intermediaries play the dynamic role in borrowing and investing in the

economics world over (Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013).

Today, despite the perception of increasing financial globalization, the international

financial system is far from being perfectly integrated (Cheng & Ma, 2007; Li, 2012;

Drummond & Liu, 2013). There is evidence of persistent capital market segmentation,

home country bias, and correlation between domestic savings and investment. The recent

deregulation of financial systems, the technological advances in financial services, and

the increased diversity in the channels of financial globalization make a return to the past

more costly and therefore more difficult (Cheng & Ma, 2007; Li, 2012; Drummond &

Liu, 2013). Financial globalization is unlikely to be reversed, specifically for the

moderately integrated economies, though the risks of such things happening still persists.

Such risks normally take place for a short period of time, at the beginning stage when the

countries make way to open up (Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013).

The newly formed globalization can cause an extreme damage and it can be termed as the

cause of the major financial crises (Cheng & Ma, 2007; Li, 2012; Drummond & Liu,

2013). There are numerous cases to emphasize countries suffered from major risks that

caused the main dilemma to halt the ongoing globalization process. The 1997-1998

Russian and Asian case involving the major crises, and 1999 crises in Brazil, Turkey in

2001, Ecuador in 2000, Argentina too suffered in 2001, while Uruguay had to undergo a

major crisis in 2002, and these scenarios had encapsulated worldwide attention and

interest (Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013). They provide us with

clear examples of the consequences of failures and major risk factors involved, allowing


us to study several links indicating crisis and failures due to globalization. In case the

right kind of national strategy is not properly measured and implemented, and if an

immaculate financial infrastructure is not properly placed at the time of integration, and if

the liberalization is followed by the unmeasured and unexpected capital inflow, it

debilitates and collapses the health condition of the entire local financial network and

system (Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013). In case the market

supporting system and fundamentals deteriorate, many exploratory tendencies form and

attack the capital outflow developed by foreign and domestic investors. For profitable

integrating process, the economic fundamentals must be very strong and healthy.

Initially, the entire local markets should be carefully assessed, properly supervised and

effectively regulated (Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013). There is a

need to maintain a robust and strong fundamentals in the key areas of economic and

financial system, along with other equally valuable structure. Only then, the entire

financial structure of the globalization system gets cultivated to intensify and face the

crisis and risk factors in the case of the country has to overcome and face foreign shocks

(Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013). Apart from that, the

imperfection and ever happening fluctuations in the international markets, similar to

panic due to the crazy situations, boom busting cyclic phenomenon and herding, the

unpredictable nature of financial fluctuation and capital unmeasured flows can turn to

contagion and lead to major crises in the economic down flow (Cheng & Ma, 2007; Li,

2012; Drummond & Liu, 2013). Even those countries, maintaining the best economic

value and fundamentals can face such obstacles in these economic uncertainties. One

another globalization, the risk factor is due to segmentation, which is normally created


between the best global financial functioning system players, whose intend to participate

and those countries who mainly depend on the domestic financial regions (Cheng & Ma,

2007; Li, 2012; Drummond & Liu, 2013).

There is an empirical literature concerning the relationship between the economic growth

and trade openness (Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013). They

always got the conflicting result persistently, stemming from mainly the empirical

aspects, which have repeatedly formed confusion within the policy makers and

researchers concerning the relationship aspects of the trade development and growth

(Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013). The basic question everyone

asks is whether the overall trade openness and the opportunity there from cause a

substantial economic growth (Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013).

There are many issues exist in the prevailing study, which needs suitable approach to

sense and take care of them, so as to institute and establish a unique relationship method

between the economic growth, relating to the trade openness (Cheng & Ma, 2007; Li,

2012; Drummond & Liu, 2013).

The researchers have deployed several tools of econometric measures on several

subjective and objective trade procedures for their functionality openness in the last many

years so as to ascertain and determine a strong and robust economic growth and trade

openness relationship (Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013). They

have established from the literature, compelling messages that there is a definite and

positive relationship between the overall economic growth and trade openness (Cheng &


Ma, 2007; Li, 2012; Drummond & Liu, 2013). The phenomenal striking growth

generated due to South Korea, Hong Kong, Taiwan, and Singapore performances of the

Asian Tigers in the past several years and the current economic growth experiences of

China and India, have produced significant changes in the commercial and economic

policies, particularly in the economy of the developing world in the foreign trade (Cheng

& Ma, 2007; Li, 2012; Drummond & Liu, 2013). In 2004, Panagariya maintained that the

free trade always supported economic growth in the region as it opens up employment,

more financial flow across the globe through the systematic financial institutions, as they

provided a strong support to several issues (Cheng & Ma, 2007; Li, 2012; Drummond &

Liu, 2013). However, they should maintain a proper approach to sustain them, so as to

establish an unambiguous and explicit understanding between the economic growth and

the trade openness (Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013). However,

this aspect in any way does not specify that the studied trade openness, relationship with

the economic growth remains fragile (Cheng & Ma, 2007; Li, 2012; Drummond & Liu,

2013). They have properly argued that in spite of methodological issues, there is no clear

evidence to specify that the trade liberalization in any way is harmful to economic growth

(Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013). The benefits are linked with

outward trend policies, which are particularly visible, having accepted by the policy

maker researchers (Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013). There are

different factors, which elaborate the reasons researchers for not providing a definite

answer to a specific question, why the trade openness should really work to achieve an

overall higher growth of the economy (Cheng & Ma, 2007; Li, 2012; Drummond & Liu,

2013). Primarily, the measures of trade openness and their respective methodologies,


creating estimated models linking openness to growth aspects have left certain doubts

(Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013). Therefore, over several years,

the researchers have deployed various different methods applying different tools to

analyse different subjective and objective openness indices to establish a specific

relationship between economic growth and trade openness. Such literature developments

have complicated researcher further in selecting appropriate proxies and econometric

techniques to analyse trade openness (Cheng & Ma, 2007; Li, 2012; Drummond & Liu,

2013). Some documents provide inconsistent evidence concerning the liberalization

growth effects.

Secondly, it is nt an ambiguous understanding of the mechanism due to which the trade

openness influences the economic growth. They have purposefully elaborated that the

future research efforts should focus to identify various mechanisms when the trade

openness has sure influence on the economic growth (Cheng & Ma, 2007; Li, 2012;

Drummond & Liu, 2013).

The economy of China has dramatically expanded in last two decades, showing an annual

growth of GDP of almost 8 percent average. Yet today, the Caribbean and Latin America

regions surpass China in absolute size terms of the economy. However, this gap is

narrowing is closing very relentlessly ever since 1970 (Cheng & Ma, 2007; Li, 2012;

Drummond & Liu, 2013). Considering the rate of a currency and the market exchange,

China stands at the sixth largest world economy. They are likely to be the leading

exporter of the world in forthcoming decade and further, considering all the pros and

cons, China is going to be the largest and the foremost economy of the world around


2025, considering their PPP - Purchasing Power Parity (Cheng & Ma, 2007; Li, 2012;

Drummond & Liu, 2013). The share of China’s global output has risen from 12 percent in

2000 to 22 percent within the following two decades (Cheng & Ma, 2007; Li, 2012;

Drummond & Liu, 2013).

The GDP per capita of China’s has progressed and increased six-fold ever since 1979,

when the GDP per capita of Latin America’s has gone up by 11 per cent only (Cheng &

Ma, 2007; Li, 2012; Drummond & Liu, 2013). The entire China is known as having the

population holding a middle-income group, the country has reached the GDP of $1,050

as a per capita in 2004 (Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013).

Whereas, the Latin America aggregate figure is around $3,800 (Cheng & Ma, 2007; Li,

2012; Drummond & Liu, 2013). However, in China, the per capita figure of income

varies substantially. The figure of per capita output based on Shanghai, which is the

wealthiest region of China, is about $4,950, a marked level, which ranks a little more

than that of Costa Rica and much below Mexico (Cheng & Ma, 2007; Li, 2012;

Drummond & Liu, 2013). In another way, and in contrast, Guizhou, the poorest province

of China, has $390GDP per capita; that is much below Haiti level, known to be the

poorest country of America (Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013).

China GDP composition has shifted tremendously in the last 30 years, compared to any

part of Latin America. In the year 1970, agricultural segment accounted for nearly one

third of economic output of the country (Cheng & Ma, 2007; Li, 2012; Drummond &

Liu, 2013). This part of the share has dropped consistently from then on, while the


agricultural section now measures only a 17% of GDP (Cheng & Ma, 2007; Li, 2012;

Drummond & Liu, 2013). The share of Industry has further expanded from 40 percent to

52 percent during the same period. The collective growth of all the industries together

supply nearly 50% of the entire country’s output, while the manufacturing takes care of

33% (Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013). Similarly, there has been

extended and parallel swing modifying the service sector, which has now accounted for a

little less than 25% of the overall output since 1970s, but measures the same figure as

manufacturing (Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013).

Also in Latin America, the share of agriculture growth of the regional GDP has reduced

to almost half ever since 1970, coming down from 14 percent to 8 percent (Cheng & Ma,

2007; Li, 2012; Drummond & Liu, 2013). However, unlike China, the contribution of the

industrial sector to gain output has come down in Latin America. It now offers only over

25% of GDP, and the manufacturing contribution is simply 16 percent (Cheng & Ma,

2007; Li, 2012; Drummond & Liu, 2013). The primary gain is due to service sector,

which measured less than 50% output in 1971, but provided over 67% of GDP today

(Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013).

The annual inflation rate in China has shown only 1 percent ever since 1990, that is due

to the periodic punctuated happened by many slight deflation episodes despite increasing

output (Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013). The costs and price rates

had increased sharply since 1980, when the average of the decade was nearly16 percent,

and increased to nearly 28% in 1994 (Cheng & Ma, 2007; Li, 2012; Drummond & Liu,


2013). The prices of consumer thereon dropped swiftly, when in 1998, the entire China

entered a time of deflation period, which lasted for almost 2 years, showing only 8%

GDP growth, in spite of 1995 peak period (Cheng & Ma, 2007; Li, 2012; Drummond &

Liu, 2013). The overall prices rose and turned negative and lower since 2000 (Cheng &

Ma, 2007; Li, 2012; Drummond & Liu, 2013).

In the year 1980, the consumer prices of China rose by 15 percent, when the Argentina

inflation rate was as high as 590 percent, and the inflation in Brazil was over 618 percent

(Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013). After 2000, in China, the

deflation range came down to -0.8 percent range, but was as high as 1.2 percent in 2003

(Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013).

The economic growth of China in the developmental framework takes into account

several positive roles, deliberately meeting the strategic and deliberated industrial

policies, having the aim to create a rapid industrialization process to overcome

technological and structural constraints (Cheng & Ma, 2007; Li, 2012; Drummond & Liu,

2013). The growth of China was successfully achieved by following a robust and

dynamic industrial policy, by implementing state intervention similar to those provided

by the previous industrialized countries of East Asia, as South Korea, Japan, Hong Kong

and Taiwan (Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013). Particularly, there

have been three major Chinese development features typical to the development policy of

the state. The consistent and constant state economic price control was formatted by the

allocation of proper resources, where the main focus was on the export oriented firms,


allowing them the freedom of openness and opportunities towards direct investment in

foreign exchange so as to overcome technological and commercial backwardness (Cheng

& Ma, 2007; Li, 2012; Drummond & Liu, 2013). The overall growth of China has been

positively and critically analysed from any historical perspectives, so as to identify the

major government and industrial reforms conducted to sustain and enhance economic

advancement and the growth within the region (Cheng & Ma, 2007; Li, 2012; Drummond

& Liu, 2013). The study demonstrated the significant role played in their industrial

policies for the rapid industrialization and the growth of China developers. This is done

from the beginning of their implementing openness policy until today (Cheng & Ma,

2007; Li, 2012; Drummond & Liu, 2013). It is further stated that China’s main growth

occurred because of their particular development policies, which were pursued by many

Chinese states so as to bring rapid progress in the industrial development (Cheng & Ma,

2007; Li, 2012; Drummond & Liu, 2013). To pursue such strategy, the view of FDI

openness to gain technology and capital, the key features were applied by the policy

makers of China. Moreover, the aim is to evaluate and analyze particular economic

reforms in China, to such specific theoretical framework, so as to highlight the

progressive strategy adopted by the policy makers of China since 1978 (Cheng & Ma,

2007; Li, 2012; Drummond & Liu, 2013).

However, the overall financial globalization benefits for mainly the developing countries

is significant and large, despite those inevitable risks on the way (Cheng & Ma, 2007; Li,

2012; Drummond & Liu, 2013). However, globalization poses many new challenges and

the policymakers have to encounter them every effectively. One major challenge every


country has to face concerning the financial globalization management is in what manner

the country can make the best use of it to take the utmost advantage of the openness and

opportunities globalization generates, when the risk factors implied are minimized

(Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013). It is vital because the financial

globalization can deepen their activities over time, which may lead to several potential

benefits. Furthermore, in the case of facing challenges in globalization, in this more and

better business wise integrated world economy, every government remains with lesser

business and financial policy instruments (Cheng & Ma, 2007; Li, 2012; Drummond &

Liu, 2013). In such cases, many different ways of financial cooperation from various

countries turn out to be more valuable and important.

1. The overall impact of the Opportunities and Challenges in case of trade openness

in China has a striking effect of financial globalization on the domestic financial

sector (Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013).

2. It is viewed with the recent developments as the main driving forces of financial

globalization (Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013).

3. There was the potential costs associated with globalization, which discusses the

net effects (Cheng & Ma, 2007; Li, 2012; Drummond & Liu, 2013).

4. Thereon, to analyze the available policy options to deal with financial

globalization and concludes the discussion with new policy implications (Cheng

& Ma, 2007; Li, 2012; Drummond & Liu, 2013).

1.2. AIMS & OBJECTIVES


Cameroon has many opportunities for investment in diverse sectors such as oil & gas,

agriculture, infrastructure, etc. but it does not possess stable trade relations with

developed economies like China. This proposal will help in providing a framework

through which the country can maximize on some of the opportunities and combat with

challenges to attain its trade development goals. The main research question for this

study will be: What are some of the opportunities and challenges in Cameroon in terms

of trade openness with China?

1.3. RESEARCH QUESTIONS

The main research question will be answered with the help of following objective:

What is the economic climate of Cameroon?

What are the opportunities and challenges present in Cameroon?

How has trade relation progressed between China and African countries?

How can trade openness flourish between Cameroon and China by overcoming

challenges and capitalizing on opportunities?

1.4. LAYOUT & STRUCTURE

The research is presented in this report in a structured and well-organized manner with

suitable layouts. While this introduction section offered the background, aims /

objectives and research questions of this study, the literature review sections offers a

detailed and comprehensive summarization of the various past studies, theoretical

aspects, relevant academic data, etc. sourced from reliable academic journals, text books,

etc. The same is followed by the research methodology section that offers a detailed


description of the research method that is employed for the study. The data collection

and analysis section presents the various key set of data collected as part of this study

and detailed analysis undertaken on the data to address the research questions. Finally,

the conclusion & recommendation section provides the key recommendation based on

the findings and outcome of the study.

2. LITERATURE REVIEW

Economic Climate of Cameroon

Close to quarter of this century pursuant to its independence, the nation of Cameroon was

considered one amongst the highly prosperous nations across Africa (Jilberto & Mommen,

2012; Hofmeyr, 2013; Brummett & Jamu). The overall drop across prices of the commodity

pertaining to the principal exports of the country — cotton, coffee, cocoa and petroleum —

during the middle period of 1980s in combination with that of the currency that is overvalued

as well as mismanagement of the economy, resulted in the longer period of recession that

lasted for a decade (Jilberto & Mommen, 2012; Hofmeyr, 2013; Brummett & Jamu). The real

Gross Domestic Product (“GDP”) at a per capita level fell down to over 60 per cent starting

from the year 1986 until 1994 (Jilberto & Mommen, 2012; Hofmeyr, 2013; Brummett &

Jamu). There was widening of the fiscal position deficits as well as the current account, while

the foreign debt increased in parallel manner. Through on account of the oil reserves as well

as the favorable conditions for the agriculture sector, Cameroon continues to be a nation that

is vastly best-endowed in terms of its commodity economies relative to the region of sub-

Saharan Africa (Jilberto & Mommen, 2012; Hofmeyr, 2013; Brummett & Jamu).


In this context, the government of Cameroon embarked with series and varied forms of the

economic reforms based programs aided by International Monetary Fund (“IMF”) as well as

World Bank starting from the period of later part of 1980s (Jilberto & Mommen, 2012;

Hofmeyr, 2013; Brummett & Jamu). Several of these myriad economic measures evidently

had painful experienced with the government of Cameroon slashing the salaries of employees

in civil service salaries to an extent of 65 per cent during the year 1993 (Jilberto & Mommen,

2012; Hofmeyr, 2013; Brummett & Jamu). In this scenario, CFA franc, widely and

commonly used currency across Cameroon as well as thirteen different African nations saw a

devaluation by about 50 per cent during January 1994. In this context, the government of

Cameroon failed in meet conditions as part of the initial four programs backed by the IMF

(Jilberto & Mommen, 2012; Hofmeyr, 2013; Brummett & Jamu).

In the recent period, though, the nation is showing encouraging signs. During the period of

March 1998, while the nation was implementing fifth program backed by IMF, a three year

period enhanced level of program for structural adjustment that was approved during August

1997, was successfully on track (Jilberto & Mommen, 2012; Hofmeyr, 2013; Brummett &

Jamu). Later Cameroon proceeded to reschedule the Paris Club pertaining debt with

favorable set of terms. By that time, the GDP of Cameroon had increased by close to 5 per

cent per year starting from the year 1995 (Jilberto & Mommen, 2012; Hofmeyr, 2013;

Brummett & Jamu). There was cautious form of optimism with respect to Cameroon

emerging from the very long period experiencing difficult economic hardships.


This Enhanced Structural Adjustment Facilities (“ESAF”) that was signed in recent time

period by IMF as well as the Cameroon Government paved way for vaster planning of

macroeconomic reforms as well as financial accountability (Jilberto & Mommen, 2012;

Hofmeyr, 2013; Brummett & Jamu). In addition the privatization amongst the most of (close

to 100 remaining enterprises of non-financial para-state nature) entities in Cameroon took

place as well as the removal of the monopoly held by state owned marketing board over the

export trades pertaining to cotton, certain varieties of coffee and cocoa (Jilberto & Mommen,

2012; Hofmeyr, 2013; Brummett & Jamu). Further privatization as well as pricing

competition across the country’s banking sector was undertaken and also the implementation

of reform labor code. All these reform were favorably complements with the vast

improvements across the judicial system as well as liberalization across political

frameworks / policies for boosting the investments (Jilberto & Mommen, 2012; Hofmeyr,

2013; Brummett & Jamu).

France continues to the key trading partner with Cameroon as well as being critical source

for the various foreign aids as well as private investment (Jilberto & Mommen, 2012;

Hofmeyr, 2013; Brummett & Jamu). Cameroon had and continues to be part of the

agreement of investment guaranty as well as bilateral accord with United States (Jilberto &

Mommen, 2012; Hofmeyr, 2013; Brummett & Jamu). The investments from United States

across Cameroon aggregates to about US Dollar 1 million, which are most across the

country’s oil sector (Jilberto & Mommen, 2012; Hofmeyr, 2013; Brummett & Jamu). The

inflation levels of the country have also been reduced and brought back to be under control.


Given this context, the government of Cameroon has an objective to become an emerging

economy by the year 2035 (Jilberto & Mommen, 2012; Hofmeyr, 2013; Brummett & Jamu).

The financial system of Cameroon represents the largest amongst the region of the Central

African Economic & Monetary Community (“CEMAC”) (Essama Nssah & Bassolé, 2010;

Narayan et al, 2011; Srivastava & Teo, 2010). The accessibility towards the financial

services are very limited, specifically for the Small and the Medium Sized Entities (“SME”)

(Essama Nssah & Bassolé, 2010; Narayan et al, 2011; Srivastava & Teo, 2010). Apart from

the conventional tendencies pertaining to banks for preferring to deal with that of larger and

well established enterprises, the determining range of factors are in addition noted across the

rates of interest concerning the loans advanced to the SMEs in being capped with 15 per cent

as well as in being taxed heavily (Essama Nssah & Bassolé, 2010; Narayan et al, 2011;

Srivastava & Teo, 2010). As of the year, 2006 the bank loans lent to SMEs reached hardly 15

per cent amongst the aggregate overall loans outstanding (Essama Nssah & Bassolé, 2010;

Narayan et al, 2011; Srivastava & Teo, 2010).

Lesser than the 5 per cent of total citizens of Cameroonians possess accessibility to the bank

accounts and affiliated services (Essama Nssah & Bassolé, 2010; Narayan et al, 2011;

Srivastava & Teo, 2010). Whilst the overall sector of microfinance are becoming

consequently to be of increasing significance, the development of this sector is being

hampered on account of the looser supervisory and regulatory frameworks applicable to the

microfinance institutions (“MFI”) (Essama Nssah & Bassolé, 2010; Narayan et al, 2011;

Srivastava & Teo, 2010). The overall banking sector has been highly dominated and


concentrated by the foreign commercial banks. Amongst the eleven major commercial banks

across Cameroon six of them are foreign owned, as well as three of these largest banks

possess more than fifty per cent of the overall assets in the financial system (Essama Nssah &

Bassolé, 2010; Narayan et al, 2011; Srivastava & Teo, 2010). Whilst generally the foreign

banks illustrate solvency ratios that are good, smaller and domestic banks illustrate a position

that is much weaker. The overall capitalization are well below average pertaining to banks

across the region of CEMAC as well as the overall profits being closer to 2 per cent, as

against the 20 per cent concerning foreign banks within the nation (Essama Nssah & Bassolé,

2010; Narayan et al, 2011; Srivastava & Teo, 2010). The same can be explained partially by

way of the higher levels pertaining to the non-performing loans that gave attained 12 per cent

during 2007, resulting in most of the banks possessing larger share of the excess level

reserves in the per cent of overall deposits as well as higher levels of the liquidity that are

unutilized (Essama Nssah & Bassolé, 2010; Narayan et al, 2011; Srivastava & Teo, 2010).

Over the much recent times, the relevant tertiary sector has been the major driver with

respect to the economic growth as has been illustrated in the Figure 1 below, and this tertiary

sector largely comprises the specifically dynamic transport and telecommunications sectors

(Essama Nssah & Bassolé, 2010; Narayan et al, 2011; Srivastava & Teo, 2010). Across the

country’s primary sector, export oriented and industrial agriculture has resulted in driving the

overall growth (Essama Nssah & Bassolé, 2010; Narayan et al, 2011; Srivastava & Teo,

2010). Cotton as well as rubber exports have continued in rising while the exports of cocoa

have faced reversed in terms of a downward trend on account of the better prices (Essama

Nssah & Bassolé, 2010; Narayan et al, 2011; Srivastava & Teo, 2010). Please refer to Figure


2 below illustrating the same. The exports of Coffee although have seen vaster fall by close

50 per cent, on account of the combination of several factors which include the overall

slowing down of the production on account of the aging plants as well as the gradual

departure from this sector, was additionally compounded with that of the exporters sustaining

and building up the stocks of coffee on account of the lower level international prices

(Essama Nssah & Bassolé, 2010; Narayan et al, 2011; Srivastava & Teo, 2010).

Figure 1 – Sectoral Contributions towards GDP – Cameroon (Essama Nssah & Bassolé,

2010; Narayan et al, 2011; Srivastava & Teo, 2010)

Figure 2 – Export Performances – Cameroon Q1 2013 to Q3 2013 (Essama Nssah &

Bassolé, 2010; Narayan et al, 2011; Srivastava & Teo, 2010)


Further, secondary sector of the country had not been suitably dynamic in comparison to the

year 2012 (Essama Nssah & Bassolé, 2010; Narayan et al, 2011; Srivastava & Teo, 2010).

Post the slump over the initial quarter, there was an expansion in industrial production by

about three per cent over the subsequent quarter on a year to year basis (Essama Nssah &

Bassolé, 2010; Narayan et al, 2011; Srivastava & Teo, 2010). These performances are

explained partly on account of the shortfalls over the electricity production resulting from the

limited capacities of hydropower at the time of dry season, that is, between December and

June in addition to the delays over the commissioning pertaining to newer power plant fired

by gas across Kribi in Cameroon (Essama Nssah & Bassolé, 2010; Narayan et al, 2011;

Srivastava & Teo, 2010). This plant with the installed capacity of 216 Mega Watts started its

operation from February 2013 with an available total capacity being close to 30 Mega Watts

for reaching in a progressive manner towards the overall installed capacities during May

2013 (Essama Nssah & Bassolé, 2010; Narayan et al, 2011; Srivastava & Teo, 2010). This

plant has been established for complementing the productions over seasonal patterns arising

from the hydropower plants of Cameroon. As per the same, it had generated capacities

between 75 Mega Watt and100 Mega Watt over the period of rainy season between July and

December, during which the hydropower had been abundant as well as cheaper, and had been

operating to mostly its full and maximum capacity starting from December with capacities


ranging between between170 Mega Watts and 180 Mega Watts (Essama Nssah & Bassolé,

2010; Narayan et al, 2011; Srivastava & Teo, 2010). In this context, it had been planned for

expanding the capacity of plant with additional levels of 114 Mega Watt as well as the

transmission lines that connect Kribi with that of Edéa are suitably equipped already (Essama

Nssah & Bassolé, 2010; Narayan et al, 2011; Srivastava & Teo, 2010). Although, whilst this

gas plant is being useful for complementing the energy mix of Cameroon, the power of grid

transporting from that of Edéa towards Douala as well as Yaoundé, representing the main

centers in the country for consumption of electricity, are outworn as well as overloaded

(Essama Nssah & Bassolé, 2010; Narayan et al, 2011; Srivastava & Teo, 2010). It needs

urgently investments for keeping up with that of rising demands as well as ensuring the

supply of power over the major urban centers of Cameroon.

Across the nation’s oil sector, upward trends over the production have continued, expanding

towards 17.4 millions of barrels over the initial three quarters during the year 2013, as

compared with 17 millions of barrels across this same period during the previous year

(Cerutti et al, 2010; Cerutti et al, 2011; Adom et al, 2010; Chan & Karim, 2010). The same is

illustrated in Figure 3 below. Although, these expansions are relatively slower when

compared with that of the projections made earlier the same year on account of the activities

delayed over the newer oil fields. The overall aggregate production of oil during 2013 are

estimated to be at the level of 24.3 millions of barrels, as compared with that of 27 millions

of barrels that were projected during April the same year (Cerutti et al, 2010; Cerutti et al,

2011; Adom et al, 2010; Chan & Karim, 2010). On an overall basis, it is significant in noting

that Cameroon has not been dependent over oil when compared to that of neighboring


countries who produce oil. The Figure 4 below illustrates the same in schematic format. Oil

related GDP illustrated 8 per cent of the overall GDP in case of Cameroon during 2011, as

against that of 38 per cent to 48 per cent across Chad, Nigeria and Angola (Cerutti et al,

2010; Cerutti et al, 2011; Adom et al, 2010; Chan & Karim, 2010). While oil per se accounts

to just one fourths of the revenues to government as well as half of overall exports for

Cameroon, while in case of the other compared three nations over three fourths of these

revenues as well as most of the overall exports came from the oil sector (Cerutti et al, 2010;

Cerutti et al, 2011; Adom et al, 2010; Chan & Karim, 2010).

Figure 3 – Quarter Wise Oil Production – Cameroon (Cerutti et al, 2010; Cerutti et al,

2011; Adom et al, 2010; Chan & Karim, 2010)

Figure 4 – Share of Oil over GDP & Exports – 2011, A Comparison (Cerutti et al, 2010;

Cerutti et al, 2011; Adom et al, 2010; Chan & Karim, 2010)


During the year 2013, price levels moderately rose and rates of inflation had ended that year

much below that of criterion of regional convergence, that is, at 3 per cent (Cerutti et al,

2010; Cerutti et al, 2011; Adom et al, 2010; Chan & Karim, 2010). Please refer to Figure 5

representing the same. The overall levels of the prices had increased at a rate of 1.6 per cent

during 2013 on a year to year basis, as compared to that of 2.5 per cent across this same

period prior to this that is previous year (Cerutti et al, 2010; Cerutti et al, 2011; Adom et al,

2010; Chan & Karim, 2010). The price levels of food that had been a major driver for

inflation across the recent times, as an increase just to the levels of 2.2 per cent, chiefly on

account of the better harvests (as against to that of 4.2 per cent across this same period

previous year) (Cerutti et al, 2010; Cerutti et al, 2011; Adom et al, 2010; Chan & Karim,

2010). The continuation of the freezes over fuel prices at retail level have in addition resulted

to the containing of the inflationary pressures.

Figure 5 – Selective Price Levels – year on year changes in per cent – 2007 till 2013

(Cameroon) (Cerutti et al, 2010; Cerutti et al, 2011; Adom et al, 2010; Chan & Karim, 2010)


The country’s trade deficits are expected in having grown during 2013 towards 1.6 per cent

of the overall GDP, as against to that of 1.1 per cent during the year 2012 (Cerutti et al, 2010;

Cerutti et al, 2011; Adom et al, 2010; Chan & Karim, 2010). The same is illustrated in the

Table 1 below. The same is chiefly on account of the rising levels of imports pertaining to

the intermediary goods towards the realization concerning the larger scope infrastructure

projects as well as lower price levels concerning some of the major forms of export products

across Cameroon, specifically coffee (Cerutti et al, 2010; Cerutti et al, 2011; Adom et al,

2010; Chan & Karim, 2010). The non-oil forms of exports are estimated in have reduced

from the initial 11.1 per cent of total GDP during 2012 to that of 10.5 per cent during 2013

(Cerutti et al, 2010; Cerutti et al, 2011; Adom et al, 2010; Chan & Karim, 2010). Over this

same time period, deficits over current account are projected in totaling to about 4.9 per cent

of the overall GDP during 2013 that is almost the same levels when compared to the earlier

year, yet more than that of the one per cent above the year 2011 values (Cerutti et al, 2010;

Cerutti et al, 2011; Adom et al, 2010; Chan & Karim, 2010). Foreign reserves have dropped

by close to US Dollar 63 million (30 Billion F-CFA) to about US Dollars 3.3 billion (Cerutti

et al, 2010; Cerutti et al, 2011; Adom et al, 2010; Chan & Karim, 2010).


Table 1 – Balance of Payments, 2011 – 2013 as per cent of GDP – Cameroon (Cerutti et

al, 2010; Cerutti et al, 2011; Adom et al, 2010; Chan & Karim, 2010)

During the year 2015, the economy of Cameroon, representing an engine concerning the

CAEMC, continued its proven resilience despite that of the unfavorable and volatile state of

the global economic situation, that is, stagnation across the Organization for the Economic

Cooperation & Development (“OECD”) member nations, slowing down of the growth across

China as well as across several of the emerging nations, and also fall across oil price levels

and the export earnings of the country (Cerutti et al, 2010; Cerutti et al, 2011; Adom et al,

2010; Chan & Karim, 2010). Further this region is also facing persistence of the pockets of

insecurities across the northern as well as eastern borders on account of the threats from

Boko Haram as well as crisis noted across the Central African Republic (Cerutti et al, 2010;

Cerutti et al, 2011; Adom et al, 2010; Chan & Karim, 2010). The growth of Cameroon during

2015 have been estimated in being a robust 5.7 per cent, led primarily by way of secondary


sector that had grown by about 8.4 per cent (Cerutti et al, 2010; Cerutti et al, 2011; Adom et

al, 2010; Chan & Karim, 2010). Further tertiary sector saw growth by 5 per cent as well as

primary sector at about 4.9 per cent. The production of oil that makes this nation effectively

net exporter of oil, grew by exceptional levels of 28.3 per cent as the newer fields started

their production (Cerutti et al, 2010; Cerutti et al, 2011; Adom et al, 2010; Chan & Karim,

2010). The overall construction sector in addition saw growth by about 7.3 per cent (Cerutti

et al, 2010; Cerutti et al, 2011; Adom et al, 2010; Chan & Karim, 2010).

The fiscal policies of the country continued to be expansionary at moderate levels, in

alignment with that of the furtherance over major projects across infrastructure. The budget

of Cameroon for 2015, akin to that of 2013 as well as 2014, had been developed as well as

implemented with the method of program budgeting (Cerutti et al, 2010; Cerutti et al, 2011;

Adom et al, 2010; Chan & Karim, 2010). Overall, the country’s monetary policy were aimed

in stabilizing the prices levels as well as the real / effective exchange rates by way of

preventing the public expenditure in crowding out the overall private investments (Cerutti et

al, 2010; Cerutti et al, 2011; Adom et al, 2010; Chan & Karim, 2010). The inflation rates saw

an increase during 2015 at 0.8 of the per cent point reaching 2.7 per cent on account of the

increasing price levels pertaining to fuels over the pumps, in itself due at about 40 per cent

cuts over the subsidies towards the oil products during July 2014, yet remaining below the 3

per cent convergence criterion of CEMAC (Cerutti et al, 2010; Cerutti et al, 2011; Adom et

al, 2010; Chan & Karim, 2010).

The Progression of Trade Relation between China and African countries


Irrespective of the slowing down in the economic rate of growth of China, the trade of

Chinese with the Sub Saharan Africa have continued its growth and expansion at rapid

levels, attaining the total aggregate value of close to US Dollar 170 billion during the year

2013 (Renard, 2011; Bodomo, 2010; Bräutigam & Xiaoyang, 2011; Shahbaz et al, 2013).

Further China has in recent times overtaken the European region to be the largest partner for

export with Sub Saharan Africa, and the regional level economies have increasingly

becoming vulnerable towards the myraid changes pertaining to the international market

commodity prices as well as the demand conditions across and arising from China (Renard,

2011; Bodomo, 2010; Bräutigam & Xiaoyang, 2011; Shahbaz et al, 2013). The overall

composition pertaining to the trade between China and Sub Saharan Africa are not essentially

symmetric, with the Sub Saharan Africa importing wide range of goods of capital and

consumer nature as well as exporting overwhelmingly the primary commodities, specifically

various natural resources, minerals and oil (Renard, 2011; Bodomo, 2010; Bräutigam &

Xiaoyang, 2011; Shahbaz et al, 2013). These patterns have become far more and increasingly

extreme over the last 5 years with the agricultural goods at present representing just merely 5

per cent amongst the overall Sub Saharan Africa’s aggregate exports towards China (Renard,

2011; Bodomo, 2010; Bräutigam & Xiaoyang, 2011; Shahbaz et al, 2013).

The rapid industrialization across China has essentially accelerated the growth across various

nations across Sub Saharan Africa, specifically those having rich and well-endowed natural

forms of resources (Renard, 2011; Bodomo, 2010; Bräutigam & Xiaoyang, 2011; Shahbaz et

al, 2013). On account of their respective wide varieties over the respective export related

profiles, there are no evidences that China had displaced the exports from the region of Sub


Saharan Africa across the third nation markets like that of the United States or else European

Union (Renard, 2011; Bodomo, 2010; Bräutigam & Xiaoyang, 2011; Shahbaz et al, 2013).

Many of the Sub Saharan Africa’s and China’s exports are overall complementary to higher

extent. The exports from China towards Sub Saharan Africa have been benefitted the

consumers, yet they have in addition put higher levels pressure over the domestic level

producers (Renard, 2011; Bodomo, 2010; Bräutigam & Xiaoyang, 2011; Shahbaz et al,

2013). Firms across Sub Saharan Africa have also faced significant levels of competition

arising from the imports from China over the period of 2000s, in part due to the overall

appreciation pertaining to real rate of exchange (Renard, 2011; Bodomo, 2010; Bräutigam &

Xiaoyang, 2011; Shahbaz et al, 2013). These appreciation concerning the real rate of

exchange across the Sub Saharan African countries had been the result concerning the

pegging of the rates of exchange towards other set of currencies (and in specific with that of

euro), overall surge across exports pertaining to raw materials as well as natural resources,

and also the amounts concerning the financial assistances from the international donors,

which includes China (Renard, 2011; Bodomo, 2010; Bräutigam & Xiaoyang, 2011; Shahbaz

et al, 2013).

Sub Saharan Africa has not been fully exploiting the comparative advantages across

agriculture for expanding the export presences across the markets of China. The analysis over

the evolution pertaining the revealed comparative advantages (“RCA”) across the last ten

years illustrate that Sub Saharan Africa had been losing the competitiveness across all of the

sectors, with a sole exception being the specific natural resources of non-oil nature, largely

metals and ores (Renard, 2011; Bodomo, 2010; Bräutigam & Xiaoyang, 2011; Shahbaz et al,


2013). The manufactures of Sub Saharan Africa possess the lowest levels of RCA for any of

the export categories as well as the levels of competitiveness pertaining to agricultural

exports seem to be experiencing erosion over time (Renard, 2011; Bodomo, 2010; Bräutigam

& Xiaoyang, 2011; Shahbaz et al, 2013). The varied trends are the likely reflection of the

structural level inefficiencies as well as logistical forms of constraints facing Sub Saharan

Africa, although, the relatively higher tariffs of China across imports of agricultural (15.1 per

cent during 2014, reduced from 18.1 per cent during 2002) could have in addition contributed

(Renard, 2011; Bodomo, 2010; Bräutigam & Xiaoyang, 2011; Shahbaz et al, 2013).

.

The Foreign Direct Investment (“FDI”) from china across Africa have surged over the period

as well as during the wake of global level financial crisis which continues in diversifying.

The flows of FDI from China towards Sub Saharan Africa increased from almost nothing

over a decade back to about US Dollar 3.1 billion during 2013, which represents 7 per cent of

the global level FDI flows towards Sub Saharan Africa (Renard, 2011; Bodomo, 2010;

Bräutigam & Xiaoyang, 2011; Shahbaz et al, 2013). China had established in it being the

major large scale investor across Africa, the dynamic which runs in parallel to that of

growing trade engagement of China. The FDI stock of China across Sub Saharan Africa

attained almost US Dollar 24 billion during 2013, indicating the annual level growth rates of

about 50 per cent between the years of 2004 as well as 2013 (Renard, 2011; Bodomo, 2010;

Bräutigam & Xiaoyang, 2011; Shahbaz et al, 2013). The global level economic crisis

originating durting 2008–09 highlighted the start of the major level expansion of the

engagement by China with the Sub Saharan Africa, in terms of the scope as well as overall

scale (Renard, 2011; Bodomo, 2010; Bräutigam & Xiaoyang, 2011; Shahbaz et al, 2013).


Whilst some of these foreign investors had moved out of the African region, the China based

firms, had already established suitable leverage across home as well as on encouragement

from the government of China, expanded the operations overseas (Renard, 2011; Bodomo,

2010; Bräutigam & Xiaoyang, 2011; Shahbaz et al, 2013). Mergers / acquisitions (“M&A”)

had surged as well as the commercial lending in addition to various forms of financing

arrangements set newer records. Oil as well as other extractive forms of industries continue

to be sectors with vaster interest for the Chinese investors (with 30 per cent of the overall

investments), yet FDI from China have undergone recently marked levels of diversification

towards manufacturing, construction and financial services (Renard, 2011; Bodomo, 2010;

Bräutigam & Xiaoyang, 2011; Shahbaz et al, 2013). From a geographical standpoint, the FDI

from China remains to be highly concentrated across Zambia, Sudan, South Africa and

Nigeria, yet at present the same extends all across African continent. The manufacturing

firms of China have increasingly invested across nations as diverse like that of Tanzania,

Nigeria and Ethiopia (Renard, 2011; Bodomo, 2010; Bräutigam & Xiaoyang, 2011; Shahbaz

et al, 2013). The review pertaining to sample of the Chinese investments of greenfield nature

across Sub Saharan Africa over the earlier decade illustrate the increasing significance

pertaining to the manufacturing sectors as well as the increasing significance of contributions

from Chinese FDI in creation of jobs across nations all over the African continent (Renard,

2011; Bodomo, 2010; Bräutigam & Xiaoyang, 2011; Shahbaz et al, 2013).

On account of the varied set of methodologies, the official set of data over the financial flows

of China differ from that of the data across other set of sources. To take an example, China

Global Investments Tracker (“CGIT”) sets the overall Chinese FDI across Africa with US


Dollar 61 billion during 2013, representing more than two times of the official figures

(Farole & Akinci, 2011; Sanfilippo, 2010; Bräutigam, 2010; Davies, 2010). During 2013,

overall value pertaining the Chinese contracts, one of the proxies towards committed forms

of investment flows, attained the staggering levels of US Dollar 82 billion (Farole & Akinci,

2011; Sanfilippo, 2010; Bräutigam, 2010; Davies, 2010). The financial involvement of China

across Africa represents multifaceted and complex status and the reliable forms of

information are not at all times accessible easily. Although, the China based banks seem to

have offered about US Dollar 52.8 billion as loans to the African nations over the period

between the years 2003 – 2011 which is equivalent to 2.8 per cent of overall GDP of China

(Farole & Akinci, 2011; Sanfilippo, 2010; Bräutigam, 2010; Davies, 2010). In similar

fashion, little amounts of information are available with respect to the investment flows

arising from the nations across Sub Saharan Africa to China (Farole & Akinci, 2011;

Sanfilippo, 2010; Bräutigam, 2010; Davies, 2010). The investments of Sub Saharan Africa

across China seem to be gradually increasing, yet remain to be marginal in the international

context. South Africa represents the sole nation across Sub Saharan Africa with significant

levels of investment presence across China other than that of Seychelles and Mauritius as

they represent offshore based financial centers (Farole & Akinci, 2011; Sanfilippo, 2010;

Bräutigam, 2010; Davies, 2010). The financial flows arising from nations in the Sub Saharan

Africa to that of China are essentially dominated with trading companies, most usually

subsidiaries of the Chinese firms which support the businesses pertaining to their respective

parent companies (Farole & Akinci, 2011; Sanfilippo, 2010; Bräutigam, 2010; Davies, 2010).


The flows of trade amongst China as well as Sub Saharan Africa had expanded in dramatic

manner over the earlier decade and illustrate no indications to slow down over the future

years. The trade between China and Sub Saharan Africa have grown with a remarkable rate

of growth of 26 per cent each year starting from 1995, attaining the aggregate value of US

Dollar 170 billion during 2013 (Farole & Akinci, 2011; Sanfilippo, 2010; Bräutigam, 2010;

Davies, 2010). At present, China alone accounts to a rough extent of 24 per cent over the

aggregate (Farole & Akinci, 2011; Sanfilippo, 2010; Bräutigam, 2010; Davies, 2010) Sub

Saharan Africa trade, which has increased in a dramatic manner from just merely 2.3 per cent

during the year 1995 (Farole & Akinci, 2011; Sanfilippo, 2010; Bräutigam, 2010; Davies,

2010). Despite the rapid and enormously increasing significance of China across the Sub

Saharan Africa region, this economic relationship is not essentially symmetric in nature as

during 2013, the share of Sub Saharan Africa over Chinese trade attained merely 3 per cent

(Farole & Akinci, 2011; Sanfilippo, 2010; Bräutigam, 2010; Davies, 2010). Please refer

below Figure 6 for the same.

Figure 6 – Trade amongst China and Sub Saharan Africa (Farole & Akinci, 2011;

Sanfilippo, 2010; Bräutigam, 2010; Davies, 2010)


The exports from Sub Saharan Africa towards China had increased in a faster manner as

compared to that of the imports, leading to the generation of larger, positive form of trade

balances (Tan Mullins et al, 2010; Kolstad & Wiig, 2011; Alden & Large, 2011; Raine,

2013). The exports of Sub Saharan Africa are chiefly concentrated over the primary form of

commodities, specifically extractable forms of resources like that of gold, nickel, copper,

phosphates, zinc, aluminum, uranium and oil, in addition to that of renewable forms of

resources as well as agricultural forms of commodities like that of cashew nuts, fish, cocoa,

cotton, coffee, rubber, and timber (Tan Mullins et al, 2010; Kolstad & Wiig, 2011; Alden &

Large, 2011; Raine, 2013). Whilst the export mix of Sub Saharan Africa are focused

narrowly over primary sector, the imports of arising from China essentially are diversified

extremely. Consumer goods form the largest portion of the share, specifically consumer

electronics, footwear, textiles / clothing, yet, capital goods like that of transportation based

equipment, commercial electronics, and machinery are in addition well represented (Tan

Mullins et al, 2010; Kolstad & Wiig, 2011; Alden & Large, 2011; Raine, 2013). Please refer

to Figure 7 for the same. The Chinese products most often are relatively less expensive

when compared to similar products that are imported from United States or European Union


that make these products to be attractive for the firms as well as the individual end consumers

in similar manner (Tan Mullins et al, 2010; Kolstad & Wiig, 2011; Alden & Large, 2011;

Raine, 2013). Further additionally, the imports of capital goods form China are enhanced

with the presence by larger Chinese funded infrastructure projects that most often comprise

procurement rules of country of origin (Tan Mullins et al, 2010; Kolstad & Wiig, 2011;

Alden & Large, 2011; Raine, 2013).

Figure 7 – Imports of Sub Saharan Africa from China (Tan Mullins et al, 2010; Kolstad

& Wiig, 2011; Alden & Large, 2011; Raine, 2013)

Over decades, Sub Saharan Africa exports have been oriented overwhelmingly towards the

Western markets, yet the trade relationships across the regions are shifting (Tan Mullins et al,

2010; Kolstad & Wiig, 2011; Alden & Large, 2011; Raine, 2013). During 2013, China had

become the most significant export partner for Sub Saharan Africa. At present China

accounts to about 27 per cent of the exports of Sub Saharan Africa, compared to 23 per cent

with respect to European Union a well as 21 per cent with respect to United States (Tan

Mullins et al, 2010; Kolstad & Wiig, 2011; Alden & Large, 2011; Raine, 2013). Whilst India


at present accounts to just about 9 per cent, rate of growth pertaining to exports by Sub

Saharan Africa to that of India are second just to China (Tan Mullins et al, 2010; Kolstad &

Wiig, 2011; Alden & Large, 2011; Raine, 2013).

The exports from Sub Saharan Africa to that of China could be grouped below four of the

major categories, (i) agricultural goods, (ii) oil, (iii) non-oil based natural resources, and, (iv)

manufactures (Tan Mullins et al, 2010; Kolstad & Wiig, 2011; Alden & Large, 2011; Raine,

2013). The Sub Saharan Africa have the RCA over the initial three of the categories and

comparative disadvantages over the fourth (Tan Mullins et al, 2010; Kolstad & Wiig, 2011;

Alden & Large, 2011; Raine, 2013). The largest form of comparative advantage for Sub

Saharan Africa is across the oil production, even though the RCA for the same have declined

starting from the early part of 2000s (Tan Mullins et al, 2010; Kolstad & Wiig, 2011; Alden

& Large, 2011; Raine, 2013). In contrast, the competitiveness of Sub Saharan Africa across

the non-oil based natural resources that includes the non-oil based energy products as well as

minerals, have increased over years (Tan Mullins et al, 2010; Kolstad & Wiig, 2011; Alden

& Large, 2011; Raine, 2013). The manufactures possessed the lowest levels of RCA as well

as the competitiveness pertaining the agricultural exports have decreased to a significant

manner starting from the early part of 2000s (Tan Mullins et al, 2010; Kolstad & Wiig, 2011;

Alden & Large, 2011; Raine, 2013). The same is illustrated in Table 2 below.

Table 2 – Exports from Sub Saharan Africa to China (Tan Mullins et al, 2010; Kolstad &

Wiig, 2011; Alden & Large, 2011; Raine, 2013)


The rebalancing by China needs to be potential for bringing vaster benefits towards the

countries all through the Sub Saharan Africa, yet the same in addition comes with significant

levels of challenges (Tan Mullins et al, 2010; Kolstad & Wiig, 2011; Alden & Large, 2011;

Raine, 2013). Over the earlier two decades, the growth of China have driven majority of

global level increases over the demands pertaining commodities like that of iron ore, copper,

aluminum, and oil (Tan Mullins et al, 2010; Kolstad & Wiig, 2011; Alden & Large, 2011;

Raine, 2013). As there is a move by China towards the more increasingly consumption

driven model of growth, the overall demands concerning for as well as price levels of the

commodities in essence are expected for being lower significantly than that of the past period

(Tan Mullins et al, 2010; Kolstad & Wiig, 2011; Alden & Large, 2011; Raine, 2013). The

same shall have direct as well as negative forms of impact over the producers of commodity

across Africa; yet the same shall also provide newer opportunities for restructuring as well as

transforming the economies of Africa (Tan Mullins et al, 2010; Kolstad & Wiig, 2011; Alden

& Large, 2011; Raine, 2013). Nations which have excessively become reliant over the

natural resource based exports shall be required in stepping up the efforts towards the

diversification of their agricultural / industrial sectors, whilst the decline across the fiscal

revenues arising from resource based sector could force challenging choices over the public

spending (Tan Mullins et al, 2010; Kolstad & Wiig, 2011; Alden & Large, 2011; Raine,

2013). The policy measures for aiding the raising of competitiveness across the sectors which


are suffering over the import competition arising from China could also aid the Sub Saharan

African region in responding suitably well towards the changes that are expected (Tan

Mullins et al, 2010; Kolstad & Wiig, 2011; Alden & Large, 2011; Raine, 2013).

The scope of vast opportunity that is created through the rebalancing of China shall not

continue to be open for an indefinite period, yet the pragmatic form of reform agenda that are

designed for increasing the productivity across the tradable forms of sector as well as

enhancement of the co-operation with that of Chinese public as well as private sectors may

vastly accelerate the growth rates and improve the livelihoods across countries all through

the Sub Saharan Africa (Tan Mullins et al, 2010; Kolstad & Wiig, 2011; Alden & Large,

2011; Raine, 2013). In various nations, the same shall require the clear form of shift over

policies as well as institutions over the pro-growth forms of environment (Tan Mullins et al,

2010; Kolstad & Wiig, 2011; Alden & Large, 2011; Raine, 2013). The particular reforms

could not be that of which were undertaken by China, yet they need to be adequately

comprehensive for demonstrating the commitment towards the pro-growth form of strategy

irrespective of the political changes as well as exogenous shocks (Tan Mullins et al, 2010;

Kolstad & Wiig, 2011; Alden & Large, 2011; Raine, 2013).

3. RESEARCH METHODOLOGY

The inductive approach will be used for this research study. This is because the data has to be

studied in comparison with the context and environment of Cameroon, which is not possible

using a purely scientific approach (Taylor et al, 2015; Saunders, 2011; Bryman & Bell,

2015). The inductive approach will help in making inferences from the collected information


and analyzing them in the context of overall relations between China and African countries

(Taylor et al, 2015; Saunders, 2011; Bryman & Bell, 2015).

The philosophy of Research will be interpretivism as it complements the inductive approach

(Taylor et al, 2015; Saunders, 2011; Bryman & Bell, 2015). The positivism approach is not

appropriate here because the study does not wish to prove or disprove any hypothesis, but

instead, its purpose is to study some of the characteristics inherent in the economy of

Cameroon. Such a research requires the data received to be interpreted as necessary and then

obtain required conclusion. Since economies are not scientific in their make-up, it is not

possible to study them without making assumptions and inferences (Taylor et al, 2015;

Saunders, 2011; Bryman & Bell, 2015).

Data collection will be done using secondary sources. The data collected from secondary

sources will be obtained from reputed journals, books and credible online sources. Some of

the sources have also been presented in the literature review section of this proposal, and

more will be included in the Data Collection & Analysis section (Taylor et al, 2015;

Saunders, 2011; Bryman & Bell, 2015).

Since agriculture is a major economy driver it will be studied with overall GDP growth. Oil

production and its export is also a significant segment which will require further analysis

(Coface Group, 2015). Economic reforms and regulations will be another variable that has to

be studied in this research. The last variable that will be studied is the presence of any trade

agreements signed between China and Cameroon over the years (US Department of State,


2014). The analysis will focus on economic improvements but main attention will be given to

these variables.

Sampling data on the variables mentioned earlier, will be collected for a period of last 5 years

(from 2010 to 2014.) This data will be gathered from government and other regulatory

websites of both Cameroon as well as China. The data will include a mix of qualitative as

well as quantitative information since the production, export and GDP data will be

quantitative but the reforms, regulations and trade agreements variables will have qualitative

data (Taylor et al, 2015; Saunders, 2011; Bryman & Bell, 2015).

4. DATA COLLECTION AND ANALYSIS

China represents the new empire, in the global economic context, that is fast growing as well

as the distinctive economic force for being reckoned to with respect to current times (Youssef

et al, 2012; Ward et al, 2012; Sheng, 2010). The large extent of the developing nations who

trade with China consider it to be an opportunity for doing business that is gainful, given the

context of market size of China as well as fast expanding industrial base (Youssef et al, 2012;

Ward et al, 2012; Sheng, 2010). The objective of this study is to assess the trade relations

amongst Cameroon and China including an important goal of recommending the manner in

which this relationship that can be mutually beneficial could further enhanced across both of

the nations and far more with respect to Cameroon. The secondary data that are used for

analyzing the observations as well as discussions are incorporated as part of this analysis.

The various findings of this illustrate that overall trade have not been beneficial to mutual

extent and has been largely tilted in being favor of China; illustrating increasing trends across


imbalances of trade and deficits. China’s Global trading network and the main aspects of

trade openness, has contributed to their significant economic growth, with rapid expansion,

and has helped them target global markets. This specific research studies the considerable

achievements in China’s international trade and the overall economic growth (Nordtveit,

2011; Humphrey, 2010; Nordtveit, 2009). Our research is based on the evolution, conception

and advancement in their international trade management and what kind of policies China

has designed in formatting trade sectors (Nordtveit, 2011; Humphrey, 2010; Nordtveit,

2009). Further, the international trading accomplishments of China are extensively analysed,

focusing on the drastic economic growth by examining and evaluating the effects of

productivity improvement due to China’s international trade policies (Nordtveit, 2011;

Humphrey, 2010; Nordtveit, 2009). Both non-parametric and econometric approaches are

used. For considering the econometric methodology, the main production function of

stochastic frontier is projected and also particular inefficiency in determinants in trade

identified. In case of non-parametric approach, every region / province Divisia index is

planned and measured as a benchmark (Nordtveit, 2011; Humphrey, 2010; Nordtveit, 2009).

This study establishes that ever-increasing global trade participation helped China reap

dynamic and static benefits, by invigorating quick economic growth of the nation. The global

trade structure and volume considering the high technological based exports have resulted in

positive regional productivity of China (Nordtveit, 2011; Humphrey, 2010; Nordtveit, 2009).

While the western and central regions of China are lagging behind in productivity,

international trade and economic growth, the eastern provinces are progressing rapidly.

China’s outstanding performance in economic growth can be traced back to its increasing

involvement in global trade and dynamic trade policy (Nordtveit, 2011; Humphrey, 2010;


Nordtveit, 2009). The increased involvement in the world market helped them reap dynamic

as well as static trade benefits, helping rapid economic growth. The dynamic effects are

shown by improving TFP – Total Factor Productivity Economic level, by performing human

capital accumulation, and the static benefits indicated by the enlarging capital good status

embodying high technology (Nordtveit, 2011; Humphrey, 2010; Nordtveit, 2009).

The economic globalization, trade liberalization as well as de-regulation are largely

impacting over the overall demand / supply of the services and goods over the global context

(Youssef et al, 2012; Ward et al, 2012; Sheng, 2010). To the large extent, economic

globalization as well as the affiliated pressures which arise from the same are changing to

gradual extent the erstwhile arrangements across market amongst the nations as well as

defining the newer patterns of trade in addition to that of the establishment or setup of the

fresh partnership agreements of economic nature between the independent states (Youssef et

al, 2012; Ward et al, 2012; Sheng, 2010). It has been evident that the ‘earlier colonial form of

trade blocks’ are being disintegrated as well as the establishment of newer trade ties are

presently in vogue, the study consequently strives in analyzing as well as examining the

overall challenges, perspectives and issues which have largely characterized the trade

relations amongst Cameroon and China in the era of economic globalization (Youssef et al,

2012; Ward et al, 2012; Sheng, 2010).

China is at present evidently considered amongst many of the analysts to be new empire, the

global level phenomenon as well as the economic threat (Deininger & Byerlee, 2012;

Cameron et al, 2014; Yusuf & Nabeshima, 2012). Over the recent times there have been


evidence of China driving the South - South trade, by way of establishing solid / robust form

of co-operation and relationship with the African nations (Deininger & Byerlee, 2012;

Cameron et al, 2014; Yusuf & Nabeshima, 2012). It has become very common to note the

phrase “China - Africa co-operation”, that agreements have been announcing the presence of

Chinese in vaster set of numbers across the African nations (Deininger & Byerlee, 2012;

Cameron et al, 2014; Yusuf & Nabeshima, 2012). This relationship between China and

Africa relations are being pursued on the basis of the notion termed as the “mutual benefits as

well as win - win principle” (Deininger & Byerlee, 2012; Cameron et al, 2014; Yusuf &

Nabeshima, 2012). Over the larger extent of these form of arrangements, the African

continent encompassing its constituent nations have provided China with raw materials as

well as energy for supporting the higher speed and swift growth of China and in turn China

has been offering Africa its urgent form of required like techniques and needed funds for

aiding Africa to develop the economy as well as combating poverty (Deininger & Byerlee,

2012; Cameron et al, 2014; Yusuf & Nabeshima, 2012).

Cameroon represents a developing economy that is driven by exports and commodity, within

which agriculture accounts for much vaster proportion of its earnings in foreign exchange as

well as GDP across long time period (Deininger & Byerlee, 2012; Cameron et al, 2014;

Yusuf & Nabeshima, 2012). Staring from its independence during 1960 till the recent time

period of late 1990’s, European Union, largely comprising Netherlands, Spain, Italy and

France, have in the traditional manner acting as the chief trading block for Cameroon, and in

combined manner accounting towards 66.1 per cent of the overall exports as well as 36.6 per

cent of the overall imports (Deininger & Byerlee, 2012; Cameron et al, 2014; Yusuf &


Nabeshima, 2012). France, the erstwhile colonial power of Cameroon experienced very long

period of history in terms of the trade related ties with Cameroon (Deininger & Byerlee,

2012; Cameron et al, 2014; Yusuf & Nabeshima, 2012). Although, during the past decade,

China transformed to be the primary importer for the exports from Cameroon specifically

with respect to export pertaining to varied of both manufactured and primary goods as well

as unprocessed timber to Cameroon (Deininger & Byerlee, 2012; Cameron et al, 2014; Yusuf

& Nabeshima, 2012).

The trade relationship amongst both the nations started around 1972, with renewal during

2002 and extended consolidation during 2006, post the signing of the strategic form of

partnership agreements at the time of China - Africa Co-operation (“FOCAC”) (Deininger &

Byerlee, 2012; Cameron et al, 2014; Yusuf & Nabeshima, 2012). In consequence to the

same, trade of China with that of Cameroon that had topped previously US Dollar Two

million over the previous forty years had surged ahead to US Dollar 800 million (Deininger

& Byerlee, 2012; Cameron et al, 2014; Yusuf & Nabeshima, 2012). Many different studies in

this context determine the growth in dynamics with respect to trade performances amongst

both the nations where during 1999 the total export of Cameroon share were at 2.7 per cent,

yet increased by 170 per cent during 2000, and has been presently foreseen to be at about US

Dollar 123 million, illustrating 7 per cent overall increase (Deininger & Byerlee, 2012;

Cameron et al, 2014; Yusuf & Nabeshima, 2012).

The pursuant review indicates that China is essentially situating itself to an increasing extent

within the economic space of Cameroon and fast becoming the significant trade partner /


player with that of Cameroon (Deininger & Byerlee, 2012; Cameron et al, 2014; Yusuf &

Nabeshima, 2012). In being the market that is fast growing and heavily industrializing,

hypothetically China provides the available outlets of market for the commodity exports from

Cameroon as well as the dependable form of source with respect to external earnings

pertaining to Cameroon (Deininger & Byerlee, 2012; Cameron et al, 2014; Yusuf &

Nabeshima, 2012). It has been evident that Cameroon continues to significantly benefit from

this strategic form of economic partnership based agreement with China (Deininger &

Byerlee, 2012; Cameron et al, 2014; Yusuf & Nabeshima, 2012). Though, unfortunately,

likelihoods are present with respect to various emergent issues: risks pertaining to dumping,

trade imbalances amongst both the nations in addition to that of non-diversification relating

to trade of Cameroon irrespective of the market available (Deininger & Byerlee, 2012;

Cameron et al, 2014; Yusuf & Nabeshima, 2012). The growing direct investments from

Chinese across Cameroon could have been the resultant consequences over the various home

industries in addition to supply chain network of the goods across the sub-regional as well as

local markets (Deininger & Byerlee, 2012; Cameron et al, 2014; Yusuf & Nabeshima, 2012).

The economic crisis over the global context has also impacted China adversely and in this

consequent extension the various commercial exchanges to Cameroon (Deininger & Byerlee,

2012; Cameron et al, 2014; Yusuf & Nabeshima, 2012).

In this context of the various emergent concerns highlighted and the various imposing

challenges, this research, hence, analyses and examines the trade relations between

Cameroon and Sino-Cameroon with the major level of thrust over the identification of the

issues that are recurrent, future challenges and perspectives (Deininger & Byerlee, 2012;


Cameron et al, 2014; Yusuf & Nabeshima, 2012). The particular objective of this study is in

examining the trends across the trade sectors / flows in addition to the analysis of the

situation pertaining trade balance amongst these two nations across the past decade

(Deininger & Byerlee, 2012; Cameron et al, 2014; Yusuf & Nabeshima, 2012). In addressing

this subject in investigation and for guiding the overall analyses concerning the research

findings as well as discussion, the study poses following set of research questions: (1) What

is the economic climate of Cameroon?, (2) What are the opportunities and challenges present

in Cameroon?, (3) How has trade relation progressed between China and African countries?,

and (4) How can trade openness flourish between Cameroon and China by overcoming

challenges and capitalizing on opportunities?

The analysis presents the argument that the export sector of Cameroon has continued to be

un-diversified to a large extent that is remained to be “traditional”, in spite of its engagement

over trade exchanges between China (Deininger & Byerlee, 2012; Cameron et al, 2014;

Yusuf & Nabeshima, 2012). The theory of Prebisch - Singer was applied for approaching as

well as analyzing the overall findings of the study (Deininger & Byerlee, 2012; Cameron et

al, 2014; Yusuf & Nabeshima, 2012). This theory present an argument that the prices of

export fall over the time period and in consequence the Less Developed Countries (“LDC”)

loose revenues continually unless the same increases the volumes of export (Deininger &

Byerlee, 2012; Cameron et al, 2014; Yusuf & Nabeshima, 2012). The Prebisch - Singer

theory shall be used for analyzing the need of Cameroon for locating the additional set of

trade partners in terms of it to being able to produce significant levels of external exchange


earning, as agriculture continues to be the chief constituent of the overall economy

(Deininger & Byerlee, 2012; Cameron et al, 2014; Yusuf & Nabeshima, 2012).

Economic & Trade Opportunities and Challenges Present in Cameroon

Domestic Challenges

Primarily three of the domestic level challenges are looming and include, (i) the

accumulation of the arrears, (ii) delays across the execution pertaining to public investments

as well as the deterioration of the business environments (Cerutti & Lescuyer, 2011; Cheru &

Obi, 2010; Béné et al, 2010). The overall stock concerning the Government influenced

arrears as well as various other payment based obligations have increased from that of 3.9 per

cent amongst overall GDP during the year 2011 to that of 6.7 per cent of the overall GDP

during the year 2013, indicating worryingly higher levels of concerns (Cerutti & Lescuyer,

2011; Cheru & Obi, 2010; Béné et al, 2010). The Table 3 below illustrates the same. These

although are figures that are tentative as well as the overall results from the audits that are

ongoing are required to suitably clarify this situation. Further the major reasons that concern

with the rising levels of the arrears as well as payment related obligations are essentially the

constant factors over the budgeting pertaining to the fuel related subsidies, building over the

obligations towards Societe Nationale de Raffinage (“SONARA”) (Cerutti & Lescuyer,

2011; Cheru & Obi, 2010; Béné et al, 2010), the national level oil refinery, as well as the

shortcomings pertaining to overall cash management, leading to Dépenses ngagées mais non-

ordonnancées (“DENO”), that is, expenditures committed yet towards which there are no

payment orders having been delivered and the residual obligations. During the budget for

year 2014, the overall costs pertaining to fuel related subsidies continue to be under budgeted


that shall further aggravate in future the various problems (Cerutti & Lescuyer, 2011; Cheru

& Obi, 2010; Béné et al, 2010). A continued level of freezing over the retail level fuel pricing

shall need a projected funds of CFAF 450 Billion representing close to three per cent of the

overall GDP, yet just about CFAF 220 Billion had been effectively budgeted towards the

year 2014 (Cerutti & Lescuyer, 2011; Cheru & Obi, 2010; Béné et al, 2010). The same shall

limit the overall effectiveness pertaining to overall budget in being realistic form of policy

making that is instrument for prioritizing the sustaining of growth as well as expenditures

concerning poverty reduction initiatives (Cerutti & Lescuyer, 2011; Cheru & Obi, 2010;

Béné et al, 2010).

Table 3 – Government Related Arrears & Other Obligations – 2011 – 2013 [Level at the

end of year, as per cent of the GDP] (Cerutti & Lescuyer, 2011; Cheru & Obi, 2010; Béné

et al, 2010)

The overall execution concerning this investment budget have been delayed increasingly.

During the year 2013, the investments spending are projected in attaining 6.5 per cent of the

overall GDP, as compared to that of 6.9 per cent that is budgeted (Cerutti & Lescuyer, 2011;

Cheru & Obi, 2010; Béné et al, 2010). Over the basis of cash, these set of numbers


essentially mask the significant level of delay over the execution pertaining to the investment

budget of 2013. During the initial three quarters pertaining this year, solely 35 per cent of

overall budgeted related investments that are financed by way of the internal resources had

been executed (Cerutti & Lescuyer, 2011; Cheru & Obi, 2010; Béné et al, 2010). The same is

illustrated in the Table 4 below. These performances could partly be elaborated on account of

reforms over the public procurements by way of creation of the Ministry for public

procurements as well as the initiation as well as execution of a relevant program budget

(Cerutti & Lescuyer, 2011; Cheru & Obi, 2010; Béné et al, 2010). On account of the same,

consequentially, the Government had extended the overall period for complementary budget

by about two months, till March 2014. If the varied delays turn to be persistent, growth

related dividend pertaining these myriad investments shall be effectively diluted (Cerutti &

Lescuyer, 2011; Cheru & Obi, 2010; Béné et al, 2010).

Table 4 – Execution of the Investment Budgets – Q1 to Q3 2013 [in CFAF Billions]

(Cerutti & Lescuyer, 2011; Cheru & Obi, 2010; Béné et al, 2010)

The overall business climate across Cameroon continue to be discouraging with respect to

newer investments. During the year 2014 version of the Doing Business Publication

presented by World Bank, Cameroon had lost 6 positions as against its rankings during 2013,

and presently holds the rank of 168 amongst the 189 nations that were studied (Cerutti &


Lescuyer, 2011; Cheru & Obi, 2010; Béné et al, 2010). For the purposes of making

Cameroon to be far more attractive amongst the investors, Government of Cameroon had

adopted the newer investment law during April 2013 (Cerutti & Lescuyer, 2011; Cheru &

Obi, 2010; Béné et al, 2010). This law provides reductions as well as exemptions over the

major variations of the taxes with respect to newer businesses in addition to that of prevailing

ones over specific conditions. The impact of this law over the revenue of Cameroon’s

Government are uncertain and yet may be significant and also need to, hence, be monitored

closely. The relevant texts continue to remain vague with respect to the administrative

procedures which are essential for the benefits from various set of tax exemptions that may

raise the concerns of transparency (Cerutti & Lescuyer, 2011; Cheru & Obi, 2010; Béné et al,

2010).

External Challenges

Over the external standpoint, the price level of oil face volatility as well as increasing levels

of financing costs over the internal markets need to be cautiously and carefully monitored

(Fonteneau et al, 2011; Trommer, 2014; Páez et al, 2010). Cameroon is essentially vulnerable

towards the commodity prices that are volatile. Any drop across the oil price levels across

international markets shall place pressure over the public finances, on account of the fact that

fourth of the revenues to the Government of Cameroon arise from that of the oil sector

(Fonteneau et al, 2011; Trommer, 2014; Páez et al, 2010). The recent forecasts from the

World Bank over commodity prices estimates the levels of oil prices in being relatively

stable with respect to nominal United States Dollars, yet decreasing steadily over the real

terms (Fonteneau et al, 2011; Trommer, 2014; Páez et al, 2010). The same is illustrated in the


Figure 8 below. The same is on account of the increasing supplies pertaining to

unconventional oil sources, gains in efficiency levels, and to a certain extent substitution

moving away from that of oil. Coffee, representing the other sector which makes

contribution towards the economy of Cameroon, has also dependency over prices at

international markers (Fonteneau et al, 2011; Trommer, 2014; Páez et al, 2010). During

2013, the export levels of coffee halved, mainly amongst the various other things, towards

the exporters essentially building up the stocks of coffee on account of the lower level

international price levels (Fonteneau et al, 2011; Trommer, 2014; Páez et al, 2010). The fall

over the prices levels pertaining to other significant agricultural related export commodities,

like that of cocoa, wood, rubber and cotton, may affect severely this primary sector

(Fonteneau et al, 2011; Trommer, 2014; Páez et al, 2010).

Figure 8 – Forecasts of Oil Price – 2013 – 2025 (as US Dollar for each Barrel)

(Fonteneau et al, 2011; Trommer, 2014; Páez et al, 2010)

The overall costs pertaining to the overall financing illustrates the indirect sourcing of the

external risks (Fonteneau et al, 2011; Trommer, 2014; Páez et al, 2010). The financial

conditions across the developing nations during the last several months had been


characterized by the portfolio levels adjustments which were influences and started rolling

through speculations pertaining to timing factors of the United States Federal Reserve

withdrawals over some of these measures that are put across place in supporting the growth,

irrespective of their being no actual changes over the purchases of longer term assets

(Fonteneau et al, 2011; Trommer, 2014; Páez et al, 2010). The yields over the 10 year long

Treasury bills issued by United States increased by about 1 per cent point, resulting in

significant levels of portfolio re-adjustments as the investors enhances their share of the

prevailing high yielding United States bonds over their respective overall portfolios

(Fonteneau et al, 2011; Trommer, 2014; Páez et al, 2010). These adjustment to portfolio

resulted in temporary and yet significant levels of reversals over the capital flows rising from

the developing nations towards that of United States. Over the cumulative basis, the investors

withdrew net level aggregate of about United Stated Dollar 64 billion in the developing

nation mutual funds over the periods between the months of June as well as August

(Fonteneau et al, 2011; Trommer, 2014; Páez et al, 2010). Gross level capital flows towards

the developing nations fall by about half as well as the stock markets as well as currencies of

numerous major developing nations economies experienced decline by as up to a level of 15

per cent (Fonteneau et al, 2011; Trommer, 2014; Páez et al, 2010).

The movements like these could have indirect forms of impact over the economy of

Cameroon by way of the increasing levels of trade flows across the emerging nations

(Fonteneau et al, 2011; Trommer, 2014; Páez et al, 2010). At present levels, the United States

Federal Reserve having announced the slowing down over its program of quantitative easing

during the year 2014, overall impact pertaining to financing costs across the emerging


nations economies which increasingly have trade relations with that of Cameroon need to be

closely and cautiously examined (Fonteneau et al, 2011; Trommer, 2014; Páez et al, 2010).

Opportunities

The various developments that are planned and executed could affect in a negative manner

over the capital accumulations or else preclude overall re-allocation pertaining to production

factors towards their highly effective usages and thus sustain the growth levels below that of

targets formulated during the 2009 issued Document of de Stratégie pour la Croissance et

l’Emploi (“DSCE”), absent the timely policy level responses (Morrissey & Zgovu, 2011;

Timko et al, 2010; Jovanović, 2015; Falola & Achberger, 2013). Essentially, Cameroon

requires the acceleration for meeting its 2020 year reference scenario based objectives that

are laid out over this DSCE (Morrissey & Zgovu, 2011; Timko et al, 2010; Jovanović, 2015;

Falola & Achberger, 2013). The observed average level rate of growth starting from the year

2010 to the year 2013 are 4.1 per cent, that is, one per cent point below that of “Vision 2035”

based targets (as well as 0.8 per cent point below that of the DSCE based reference scenario

as illustrated in Figure 9 below) (Morrissey & Zgovu, 2011; Timko et al, 2010; Jovanović,

2015; Falola & Achberger, 2013). The attainment of these objectives that are set for the year

2020 shall need the annual level rate of growth of about 9.5 per cent over the period of 2014

– 2020 as against that of the 4.8 per cent to 5.4 per cent which had been projected by World

Bank. The same is presented in Figure 10 below (Morrissey & Zgovu, 2011; Timko et al,

2010; Jovanović, 2015; Falola & Achberger, 2013).


Figure 9 – Actual Vs Projected levels of GDP Growth Rates in Comparison to

Objectives of the Government – 2010 – 2020 (Morrissey & Zgovu, 2011; Timko et al,

2010; Jovanović, 2015; Falola & Achberger, 2013)

Figure 10 – GDP Rate of Growth Essential for Attaining Government set Objectives

(Morrissey & Zgovu, 2011; Timko et al, 2010; Jovanović, 2015; Falola & Achberger, 2013)

The situation presented essentially requires renewed form of attention towards the myraid

sources pertaining to growth for Cameroon — for identifying the domains of policy which

could effectively aid Cameroon to attain the levels of economic growth which are very much

essential for developing sustainably the nation as well as reducing poverty (Morrissey &

Zgovu, 2011; Timko et al, 2010; Jovanović, 2015; Falola & Achberger, 2013). On account of

the significant impacts over education across the longer term growth, the revision over the


sources pertaining the growth need to start with greater trade and economic engagement with

nations that offer vast and sustained scope of economic growth (Morrissey & Zgovu, 2011;

Timko et al, 2010; Jovanović, 2015; Falola & Achberger, 2013). In the current global

economic and political context, China offers a robust and stable partner for strategic

economic growth (Morrissey & Zgovu, 2011; Timko et al, 2010; Jovanović, 2015; Falola &

Achberger, 2013).

Analysis

The overall presentation as well as analysis pertaining to observations are undertaken as per

the sub themes as follows: (i) exports of Cameroon to China, (ii) composition and evolution

across the time periods of 1999 to 2005 (using comparative set of analysis that are made

during the years between 2001 as well as 2005 during some of the cases), (iii) the exports of

China to Cameroon: composition and evolution across same time period as well as trade

balance amongst both the nations (Deininger & Byerlee, 2012; Cameron et al, 2014; Yusuf &

Nabeshima, 2012).

The Figure 11 below illustrated that the primary as well as unprocessed form of mineral

products (comprising minerals and oil) as well as raw materials (comprising rough wood, raw

cotton and affiliated products) are exported to that of China (Sakhuja & Chan, 2016; Goldin

& Mariathasan, 2014; Hargroves & Smith, 2013). There have been insignificant or very little

value addition over the commodity exports of Cameroon (Sakhuja & Chan, 2016; Goldin &

Mariathasan, 2014; Hargroves & Smith, 2013). In comparison to both the export time periods

(that is, 2001 as well as 2005) based data over the Figure 11, the same in addition illustrates


no or little diversification with respect to exports of Cameroon to that of china over the years.

Instead the volumes of export with respect to some of the goods like wood, raw cotton, and

crude materials recorded the steady form of increases, whilst oil and minerals exports

reduced to the significant extent (Sakhuja & Chan, 2016; Goldin & Mariathasan, 2014;

Hargroves & Smith, 2013). These reductions may possibly be elaborated by way of the

inability of Cameroon in the meeting with the supply quota that is expected. In consequence,

China was forced in diverting the demands over to various other competing nations like that

of Angola and Nigeria, as had been the case with that of oil (Sakhuja & Chan, 2016; Goldin

& Mariathasan, 2014; Hargroves & Smith, 2013). Over the external standpoint, the price

level of oil face volatility as well as increasing levels of financing costs over the internal

markets need to be cautiously and carefully monitored (Fonteneau et al, 2011; Trommer,

2014; Páez et al, 2010). Cameroon is essentially vulnerable towards the commodity prices

that are volatile. Any drop across the oil price levels across international markets shall place

pressure over the public finances, on account of the fact that fourth of the revenues to the

Government of Cameroon arise from that of the oil sector (Fonteneau et al, 2011; Trommer,

2014; Páez et al, 2010). The recent forecasts from the World Bank over commodity prices

estimates the levels of oil prices in being relatively stable with respect to nominal United

States Dollars, yet decreasing steadily over the real terms (Fonteneau et al, 2011; Trommer,

2014; Páez et al, 2010).


Figure 11 – Distribution of Exports from Cameroon to China (Sakhuja & Chan, 2016;

Goldin & Mariathasan, 2014; Hargroves & Smith, 2013)

2001 2005

Whilst Cameroon principally exported the primary products which as illustrated in the

Figure 12 below presents that imports from Cameroon includes both the manufactured as

well as primary products from that of China (Sakhuja & Chan, 2016; Goldin & Mariathasan,

2014; Hargroves & Smith, 2013). The comparative assessment of these data across both of

the pie charts illustrates then evolution as well as growing dynamism over the Chinese

exports: (i) reductions in terms of primary products like cereals, and (ii) growing trends

across the manufactured commodities like equipment, transport, machinery and affiliated

products. These varied dynamics indicates that China has enjoyed the significant levels of

comparative advantages over the export trade between Cameroon (Sakhuja & Chan, 2016;

Goldin & Mariathasan, 2014; Hargroves & Smith, 2013).


Figure 12 – Distribution of the Imports by Cameroon from China (Sakhuja & Chan,

2016; Goldin & Mariathasan, 2014; Hargroves & Smith, 2013)

2001 2005

The Figure 13 below illustrates the trend analysis pertaining to trade relations amongst both

the nations during the time period being surveyed. The data illustrates the unfavorable and

steady decline concerning the export commodities to China from Cameroon (Sakhuja &

Chan, 2016; Goldin & Mariathasan, 2014; Hargroves & Smith, 2013). The decline trend may

be attributed partly to that of the reducing stock of resource (akin to the instance of minerals

and oil explained earlier) as well as inability with respect to latter for providing China with

adequate levels of supply quantities; hence mandating the latter in importing from the various

other nations producing the same (Sakhuja & Chan, 2016; Goldin & Mariathasan, 2014;

Hargroves & Smith, 2013). In alternate, the reduction with respect to exports can be an

outcome arising from the weaker demand of China with respect to other set of raw materials

that are produced across Cameroon like that of banana, cocoa, coffee, etc. (Sakhuja & Chan,

2016; Goldin & Mariathasan, 2014; Hargroves & Smith, 2013).


Figure 13 – Trends the Export & Imports (Sakhuja & Chan, 2016; Goldin & Mariathasan,

2014; Hargroves & Smith, 2013)

In contrast, whilst the exports of Cameroon had plummeted, the export performances of

China evidences a sustained levels of increases (Sakhuja & Chan, 2016; Goldin &

Mariathasan, 2014; Hargroves & Smith, 2013). The same could be largely attributed with

that of the facts which exports from China largely skewed towards the manufactured goods

which have the volumes that are equally noticed with surges as well as had found the ready

market across Cameroon (Sakhuja & Chan, 2016; Goldin & Mariathasan, 2014; Hargroves &

Smith, 2013). These variances over the volumes of export indicates the imbalances across the

trade context. The Figure 14 below illustrates that the performances of trade exports afross

Cameroon increased to a slight extent between the years 1999 as well as 2000 and also

further ahead there was successive registration of the steady downturns (Sakhuja & Chan,

2016; Goldin & Mariathasan, 2014; Hargroves & Smith, 2013).


Figure 14 – Distribution of the Trade Balance amongst Cameroon & China (Sakhuja &

Chan, 2016; Goldin & Mariathasan, 2014; Hargroves & Smith, 2013)

The trade amongst the nations have to essentially be mutually beneficial as well as

reciprocal, cognizant to the various comparative advantages of the producing nations

(Deininger & Byerlee, 2010; Blanco & Razzaque, 2012; Zhao, 2013). The same has although

not been noted or experiences in the context of both these nations (Deininger & Byerlee,

2010; Blanco & Razzaque, 2012; Zhao, 2013). The myriad set of challenges / issues have

arisen when one has to examine the various trade exchanges amongst both the nations.

Prominent, among these, are the issues pertaining to trade imbalances that in case of

Cameroon are registering steady form of decline towards the negative per cent points; whilst

China is enjoying the increasing levels of trade surpluses (Deininger & Byerlee, 2010;

Blanco & Razzaque, 2012; Zhao, 2013). The equally assessed fact from this analysis pertains

to the problem concerning the evident non-diversification in the exports of Cameroon

despites the larger market of China (Deininger & Byerlee, 2010; Blanco & Razzaque, 2012;

Zhao, 2013).


While it has been evident that essentially Cameroon possesses the vast variety of the raw

materials that can benefit largely the overall industrial sector across China, unfortunately the

trade related statistics illustrate that exports from Cameroon to that of China have been to a

large extent depreciated across time, leading to part extent on account of the inability in

increasing the levels of production pertaining to the basic forms of raw materials (Deininger

& Byerlee, 2010; Blanco & Razzaque, 2012; Zhao, 2013). The same is specifically true in

considering that the same is the non-renewable form of resources that suffer the pertinent

risks of depletion as well as stricter form of environmental regulation (the sectors of wood

and oil in specific) (Deininger & Byerlee, 2010; Blanco & Razzaque, 2012; Zhao, 2013).

There are needs for Cameroon in developing as well as enforcing measures towards

safeguarding, countervailing and anti-dumping for countering unfair practices of trade with

respect to China in addition to the reduction of the current trade deficits (Deininger &

Byerlee, 2010; Blanco & Razzaque, 2012; Zhao, 2013). The overall costs pertaining to the

overall financing illustrates the indirect sourcing of the external risks (Fonteneau et al, 2011;

Trommer, 2014; Páez et al, 2010). The financial conditions across the developing nations

during the last several months had been characterized by the portfolio levels adjustments

which were influences and started rolling through speculations pertaining to timing factors of

the United States Federal Reserve withdrawals over some of these measures that are put

across place in supporting the growth, irrespective of their being no actual changes over the

purchases of longer term assets (Fonteneau et al, 2011; Trommer, 2014; Páez et al, 2010).

The yields over the 10 year long Treasury bills issued by United States increased by about 1

per cent point, resulting in significant levels of portfolio re-adjustments as the investors


enhances their share of the prevailing high yielding United States bonds over their respective

overall portfolios (Fonteneau et al, 2011; Trommer, 2014; Páez et al, 2010). These

adjustment to portfolio resulted in temporary and yet significant levels of reversals over the

capital flows rising from the developing nations towards that of United States.

The overall challenges shall hence be with respect to China and Cameroon for improving the

prevailing trade deficits with imports by China with respect to other set of primary products

sourced from Cameroon (Deininger & Byerlee, 2010; Blanco & Razzaque, 2012; Zhao,

2013). Whilst it is very significant for Cameroon in improving the research / development

over one other for increasing the prevailing levels of production (mineral deposits and Oil) as

well as timber, there are needs for China in diversifying the imports made by it from that of

Cameroon (Deininger & Byerlee, 2010; Blanco & Razzaque, 2012; Zhao, 2013). There could

various other set of products like that of edible fruits and banana, cocoa, coffee, etc. that have

never been imported from Cameroon (Deininger & Byerlee, 2010; Blanco & Razzaque,

2012; Zhao, 2013). The increasing levels of production levels pertaining current resources s

well as diversification of commodity are hence very crucial in improving the trade relations

amongst both these two nations (Deininger & Byerlee, 2010; Blanco & Razzaque, 2012;

Zhao, 2013).

5. CONCLUSION & RECOMMENDATIONS

5.1. MAIN RESEARCH FINDINGS

The overall contributions of the trade towards economic growth as well as development

can never be over-emphasized (Cosbey & Mann, 2014; Koohafkan & Altieri, 2010;


Hanson & Tang, 2016). The overall business climate across Cameroon continue to be

discouraging with respect to newer investments. During the year 2014 version of the

Doing Business Publication presented by World Bank, Cameroon had lost 6 positions as

against its rankings during 2013, and presently holds the rank of 168 amongst the 189

nations that were studied (Cerutti & Lescuyer, 2011; Cheru & Obi, 2010; Béné et al,

2010). For the purposes of making Cameroon to be far more attractive amongst the

investors, Government of Cameroon had adopted the newer investment law during April

2013 (Cerutti & Lescuyer, 2011; Cheru & Obi, 2010; Béné et al, 2010). This law

provides reductions as well as exemptions over the major variations of the taxes with

respect to newer businesses in addition to that of prevailing ones over specific

conditions. The impact of this law over the revenue of Cameroon’s Government are

uncertain and yet may be significant and also need to, hence, be monitored closely. The

relevant texts continue to remain vague with respect to the administrative procedures

which are essential for the benefits from various set of tax exemptions that may raise the

concerns of transparency (Cerutti & Lescuyer, 2011; Cheru & Obi, 2010; Béné et al,

2010). It has been envisaged that the establishment of the trade based relationship with

that of China meant an increase in the export destinations of Cameroon, performances as

well as previous foreign exchange based earnings with respect to Cameroon (Cosbey &

Mann, 2014; Koohafkan & Altieri, 2010; Hanson & Tang, 2016). These set of

assumptions continue to be hypothetical in consideration to that of the trade relationships

having registered a consistent trend of decline, with the imbalances attaining the

negative levels of per cent points. In an ironical manner, in spite of the larger market as

well as the growing trend of the industrial base across China that is offered, the export


sector of Cameroon has not penetrated successfully the overall Chinese market, and

essentially offering very scarce opportunities or potential for Cameroon in increasing

and diversifying the overall volume pertaining to the exports (Cosbey & Mann, 2014;

Koohafkan & Altieri, 2010; Hanson & Tang, 2016). In contrast, China has been

benefiting substantially from the prevailing trade based relationships with that of

Cameroon: that provides the source for raw materials to the China based industries as

well as an accessible market for the goods manufactured in China (Cosbey & Mann,

2014; Koohafkan & Altieri, 2010; Hanson & Tang, 2016).

The prevailing evaluation concerning the trade related relationships amongst both the

nations reveal that China, instead of Cameroon has been benefiting to a significant

extent from that of the trade agreements; extensively indicating that the trade

relationships have never been beneficial mutually to both of the nations and specifically

being so in case of Cameroon (Cosbey & Mann, 2014; Koohafkan & Altieri, 2010;

Hanson & Tang, 2016). The reversing of the current trends across trade imbalances as

well as towards promotion of future trade relations that is mutually beneficial shall be

attained by way of the following recommendations (Cosbey & Mann, 2014; Koohafkan

& Altieri, 2010; Hanson & Tang, 2016).

Recommendations:

Cameroon shall need to undertake the evaluation of the trade relationships with that

of China, determining varied domains over which the trade could be promoted


China shall needs to extend / diversify the domain of the prevailing imports from that

of Cameroon, through the reduction of tariffs as well as quotas for covering various

other sectors like that of edible fruits, cocoa, coffee, etc, over which Cameroon

possible absolute competitive advantages in production.

5.2. LIMITATIONS OF THE RESEARCH

The study was undertaken on the basis of secondary data that are available from the

sources that are publicly accessible. While the same is commensurate with that of the

scope of this project, the same limits the overall validity and depth of the study’s

proposals and the analysis presented.

5.3. SUGGESTIONS FOR FURTHER STUDY

In line with the limitation of the study presented as well as the overall findings / outcome

of this study, future research can focus on garnering relevant primary data in terms of

expert interviews, surveys, etc. to enrich and further broaden the scope of the study.


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