The recent Chinese yuan devaluation is not the real concern for Africa. A weakened Chinese economy is, says Amadou Sy, who this year was named director of the Brookings Institution’s Africa Growth Initiative.

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From Brookings. Opinion by Amadou Sy.

China is Africa’s largest bilateral trading partner.

So far, press reports and analysts have stressed that African exports to China may fall as they become more expensive following the yuan’s devaluation. Currencies in African countries with strong exports to China, like South Africa (gold and wine), Angola (oil), and the Zambia (copper) have already fallen following Beijing’s move.

However, reports also point out that some African countries—such as Ethiopia, Kenya, and Mozambique—may benefit from the cheaper cost of Chinese goods that they import, such as Chinese-made heavy machinery, bulldozers, and electrical lines. African retailers and consumers will also have access to cheaper Chinese goods.

China’s possible economic slowdown is the real issue.

The turbulence in global markets following the devaluation has been mostly driven by market participants’ concerns over a stronger-than-anticipated slowdown of the Chinese economy. China’s GDP official growth rate has dropped to 7 percent from a double-digit average in 2010, and there are questions whether it is on a downward trend. The answer is not clear and some China specialists, like Brookings Senior Fellow David Dollar, think that China still is growing in the 6-to-7 percent range and doing well.

The key issue is that a slowdown in China’s economic growth is a serious risk to Africa’s economic outlook.

For instance, the latest World Bank Africa’s Pulse clearly flags that “the balance of risks to Africa’s outlook remains tilted to the downside” and that “on the external front, a sharper-than-expected slowdown in China, a further decline in oil prices, and a sudden deterioration in global liquidity conditions are the main risks.”

Similarly, the latest IMF World Economic Outlook section on sub-Saharan Africa, echoing earlier analysis in the Regional Economic Outlook, notes that “… further weakening of growth in Europe or in emerging markets, in particular in China, could reduce demand for exports, further depress commodity prices, and curtail foreign direct investment in mining and infrastructure.”

More than the movements of the yuan, every African ministry of finance and central bank should be carefully watching the movements in the determinants of Chinese growth. I would even argue that they should have specialized “China Watch” units monitoring the evolution of Chinese real estate and business investment, infrastructure investment and consumption, as well as urbanization and service industries trends.

The bad news is that, unlike in the post-global financial crisis period, African countries will not be able to rely on trade and investment with China as a buffer now that they are struggling to manage the effect of domestic and external risks, such as large fiscal deficits, declines in oil and other commodities and domestic security related risks. The possible good news is that a Chinese economic slowdown could delay the expected increase in long-term U.S. interest rates.

A Chinese economic slowdown will definitely shrink the window of opportunity for policy action in Africa. But there is some light at the end of the tunnel. First, intra-regional trade and investment has the potential to grow in the continent. Second, India is strengthening its trade with Africa, and India’s growth is expected to be resilient (hovering around 5 percent).

U.S.-Africa trade has the potential also to increase as initiatives such as the African Growth and Opportunity Act have not yet been fully utilized. Third, although European Union’s growth may also be hurt by a Chinese slowdown, the recent Greek bailout is removing some uncertainty in the short term.

So while we are not fully sure about the extent of a Chinese slowdown, African policymakers should accelerate the pace of reform, pray for a resilient Chinese economy and E.U. rebound, and start betting on India.

Read more at Brookings.