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Economy

China Explores Strategic Partnership with Morocco Amid Western Trade Barriers

Sunday 08 December 2024 - 07:38

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China is increasing investments in Morocco to capitalize on the kingdom's strategic advantages, including its proximity to European markets and access to the African Continental Free Trade Area (AfCFTA).

In an analysis by Ahmed Aboudouh, an associate fellow at Chatham House, Morocco is identified as a pivotal player in the emerging global trade dynamics. Chinese President Xi Jinping’s recent visit to Morocco following the G20 summit in Brazil signals Beijing's intent to counteract rising protectionist policies in Europe and the United States.

Chinese companies are making significant investments in Morocco's electric vehicle (EV) sector. Notably, Gotion High-Tech has committed $1.3 billion to establish Africa’s first EV battery gigafactory near Rabat. Additionally, BTR New Material Group and Shinzoom have pledged $300 million and $690 million, respectively, toward battery component production. These initiatives align with China's broader strategy to circumvent Western trade barriers.

Morocco's strategic location, resource availability, and economic partnerships make it an attractive alternative for Chinese companies aiming to mitigate the impact of EU and US tariffs. The EU recently imposed tariffs of up to 35.3% on Chinese EV imports, while the US raised its own tariffs from 25% to 100%, citing concerns over industrial supply chains and "friendshoring" strategies.

“US and EU tariffs will also accelerate Chinese offshoring,” Aboudouh notes. By relocating manufacturing operations abroad, Chinese firms can continue accessing Western markets without falling foul of new trade restrictions. Morocco has already seen numerous collaborations between Chinese manufacturers and businesses from Western-aligned countries.

Despite these advantages, Aboudouh warns that Morocco’s growing role in China’s EV strategy could place it at the center of global power competition. He highlights the potential for intensified scrutiny under future US or EU policies targeting Chinese investments in third-party nations.

Morocco has so far balanced its partnerships carefully, avoiding membership in China-led multilateral groups such as BRICS while maintaining a transactional approach to bilateral relations. However, this position may prove challenging in a rapidly shifting trade landscape.

If successful, Morocco’s navigation of these pressures could serve as a model for other Global South nations, demonstrating how to attract investment while safeguarding national interests amidst escalating global trade tensions.