Navigating Economic Uncertainties: A Deep Dive into China's Impact on Africa's Global Value Chains

This paper investigates the nexus between the economic policy uncertainty of China and Africa’s global value chains (GVC). The study was based on a panel analysis of pooled mean group (PMG) estimation which covers 19 years and 10 countries. The results of the estimation revealed a mixed reaction to the impact of China’s economic policy uncertainty on Africa’s global value chains. The economic policy uncertainty (EPU) indicated a short run negative effect on GVC and a positive significant effect in the long run. The result is in line with a section of the previous reports which suggests that uncertainty could have a positive effect on trade flows. This shows that the immediate shock of the EPU is detrimental to Africa’s global value chain integration. However, as we approach the long run, Africa’s global value chains improve alongside the EPU of China. It is therefore recommended that African countries diversify their trade partners through fostering good partnerships with other countries and regions beyond China, so that sudden uncertainty shocks in China’s economy will not have much effect on their economies. Lastly, African decision-makers should invest in domestic industries while promoting a conducive environment for business to thrive. This will boost domestic production and reduce reliance on foreign intermediate products.