Chinese President Xi Jinping, speaking at the Asia-Africa Summit in Jakarta this weekend, has announced a trade initiative to all Least Developed Countries that China enjoys diplomatic relations with. Stating that all such nations would be entitled to duty-free tariff reductions of 97 percent of previous customs rates, he used the summit to promote China as a trade partner to Africa and to push forward the “New Silk Road” and the establishment of the Asian Infrastructure Investment Bank.
A least developed country (LDC) is a United Nations definition of a nation that exhibits the lowest indicators of socio-economic development with the lowest human development index ratings of all the countries in the world. A country is considered a Least Developed Country if it meets three criteria:
Poverty (adjustable criterion: three-year average GNI per capita of less than US$ 1,190)
Human resource weakness (based on indicators of nutrition, health, education and literacy)
Economic vulnerability based on instability of agricultural production, instability of exports of goods and services, economic importance of non-traditional activities, merchandise export concentration, handicap of economic smallness, and the percentage of population displaced by natural disasters.
The majority of LDC’s are based in Africa and Asia. The complete United Nations list can be found here. Of these, Afghanistan, Bangladesh, Bhutan, Cambodia, Laos, Myanmar and Nepal lie directly within China’s geographical sphere of influence. Meanwhile, China’s trade with Africa has been booming – worth some US$ 200 billion in 2014. By comparison, US-Africa trade runs at US$ 85 billion and EU-Africa trade at US$ 113 billion although it should be noted these figures are for the African continent as a whole and not just the LDC’s.