Reopening of borders in China: what is the impact on Mauritania’s economy?

When China, the world’s second largest economy, sneezes, there is no doubt that several economies will catch a cold. The reopening of China’s borders should therefore be beneficial on several fronts.

Tourism: China’s interest in returning to the island

Growth in China’s Gross Domestic Product (GDP) is projected by the Investment Bank to increase from 3% in 2022 to 4.5% in 2023. The re-opening of borders in China from January 8 will have a positive economic impact after restrictions imposed due to the economic crisis. pandemic and its variants. The expected revival in the travel sector in China could give a positive wind to Mauritanian tourism. With 42,740 Chinese visitors leaving their suitcases in Mauritius in 2019, China has positioned itself as one of the important markets for the country.

The closure of their borders, explains Geneviève Dardanne, President of the Association of Inbound Operators (Mauritius), has had a detrimental effect on Mauritius. “With Chinese tourists, we would have already reached the goal of one million visitors. They have different cultural expectations that we can meet. It is a very vibrant and profitable market in the country that benefits the entire tourism ecosystem in Mauritius. Therefore, this reopening is a good sign, even in difficult circumstances,” he said.

According to him, the Chinese are interested in Mauritius. Moreover, they are already starting to question the island’s hoteliers for information about the protocols in place in Mauritius, hence the importance of identifying them as soon as possible.

Number of Chinese tourists in Mauritius
2018 65,736
2019 42,740
2021 499
2022 1734
Source: Statistics Mauritius

Ravi Guti.

Construction sites: no real effects

Still on the travel agenda, the reopening of borders should once again allow Chinese companies operating in local construction sectors to attract labor. BACECA president Ravi Gutti, however, makes it clear that member companies have not really suffered from the situation. “There are not many companies in our association that hire Chinese workers. On the other hand, it is not ruled out that Chinese companies working in Mauritius are affected by the closure of borders in China.

International trade: Positive for the supply chain

China, a source of supply for many countries, lifted certain health restrictions last December. Even if Covid-19 is far from under control in Beijing, international trade can breathe a sigh of relief. Sunil Boodhoo, director of the International Trade Department of the Ministry of Foreign Affairs, claims that the global supply chain is beginning to stabilize, which is positive for the international economy. “The closure of China’s borders did not stop trade with Mauritius. We were able to continue our import and export with China. Removal of restrictions will lead to improvement of the situation. The price of global cargo transportation should also stabilize.”

Sunil Bodhoo.

Mauritius’ imports from China are 34.16 billion rupiah between January and September 2022, while Mauritius’ exports to Beijing are 580 million rupiah in the same period. On the other hand, Sunil Boodhoo argues that the war in Ukraine remains a major concern in early 2023, and this is an inflationary factor.

Mauritania exports to China
2017 946 million rupees
2018 1.16 billion rupees
2019 1.14 billion rupees
2020 934 million rupees
2021 1.07 million rupees
January to September 2022 580 million rupees
Mauritius imports from China
Year/period To ascend
2017 29.67 billion rupees
2018 31.82 billion rupees
2019 33.23 billion rupees
2020 27.56 billion rupees
2021 38.09 billion rupees
January to September 2022 34.16 billion rupees
Source: Statistics Mauritius

Paul Baker, CEO of International Economics Consulting: “It will not be in Mauritius’ interest to take advantage of the influx of Chinese tourists.”

Paul Baker

Does the re-opening of borders in China bring some relief to the global economy and thereby to Mauritania’s economy?
China’s change in Covid policies is indeed bringing great relief to the global supply chains of the world’s largest exporting powerhouse. However, US sanctions against China (especially on microchips) will change the structure and routes of trade in 2023. Also, China has not recovered from the Covid-19 crisis despite lifting its strict lockdowns. This will continue to have an impact due to absenteeism and production line disruptions. China’s supplies will also be affected by commodity export bans and supply shocks related to the Ukraine-Russia war.

What impact could this reopening have on shipping and the global supply chain?
As trade begins, we can expect more transport routes to open up and prices to drop – within reason. But this will not be a drastic change.

As for the actual price drop, can we expect a drop in raw materials?
I don’t believe it. Raw materials are subject to restrictions. I can cite here the ban on nickel ore and bauxite in Indonesia or the ban on crude lithium exports in Zimbabwe. According to a study by the Organization for Economic Co-operation and Development (OECD), more than 30 countries around the world impose export taxes, quotas, bans or other restrictions. China is one of these countries. Recently, for example, it banned the export of fertilizers. In addition, the situation between Ukraine and Russia affects aluminum, nickel, palladium, potassium and vanadium.

Do you think the ongoing Covid-19 in China will again contribute to Mauritius tourism from this first quarter?
In general, tourism from China is expected to explode after two years of disconnection from the world. The frustrated middle class is ready to travel again. However, given the new option and the massive infections in China, I don’t think it is in Mauritius’ interest to capitalize on the influx of tourists from China. We know the challenges the country will face if a wave of Covid-19 cases hits Mauritius, which is very likely. Therefore, if we choose the path of prudence rather than the path of revenue, everything will depend on the policy of the government.

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