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In fact, China created 14,127 jobs across the continent in 2015. Until recently, the lack of Western investment statistics in African countries to compare with China's own statistics and reports of China’s investment and financing (see my post on CARI blog China in Africa: Much Ado about Investment) had convinced Africans of this abandonment. But the numbers are also understated because they don’t include Chinese money that is parked in an offshore financial center (British Virgin Islands, Cayman Islands, even Hong Kong, which is the destination of nearly 60 percent of China’s FDI), they don’t capture smaller investors, and they don’t record acquisitions that include African assets, but that took place in another jurisdiction (i.e. Business Making Chinese investment in African ports work despite risks. I am also is an adjunct professor at the Hong Kong University of Science and Technology and member of the advisory board of Berlin-based China think-tank MERICS, an advisor to the Hong Kong Monetary Authority’s research arm (HKIMR) and the Asian Development Bank (ADB) as well as a member of the board of the Hong Kong Forum and cofounder of Bright Hong Kong. At the 2018 Forum on Africa-China Cooperation (FOCAC), Chinese President Xi Jinping pledged €55bn in new commitments over three years, of which €9 bn will come from Chinese companies. I’m also very active in international media as well as social media. This itself justifies a keen interest in better understanding China’s investor role in Africa. The rise of China in Africa has triggered an ongoing debate about whether Chinese capital is a barrier that entraps African governments in practices that … They often don’t. Narrowing the issue down to the speed of such convergence, the data surprisingly shows that China is not yet the largest investor even in terms of FDI flows. inauguration of the national wrestling arena on July 22, 2018, in Dakar. All in all, when looking at China’s increasingly relevant investment in Africa, some conclusions can be drawn for Europe. The need to protect China's increased investments in Africa has driven a shift away from China's traditional non-interference in the internal matters of other countries to new diplomatic and military initiatives to try to resolve unrest in South Sudan and Mali. South Africa is the second African country in this top with 280 projects and 152 active Chinese firms. Chinese investments and contracts in sub-Saharan Africa total $299 billion from 2005 to 2018, according to the China Investment Global Tracker, … You can set your address, phone number, email and site description in the settings tab.Link to read me page with more information. All in all, these trends are surely important to watch for companies aiming at competing in the African market. China's President Xi Jinping inked a clutch of trade accords on July 21, 2018 on the first visit by a Chinese leader to Senegal in almost a decade. According to McKinsey, over 10,000 Chinese-owned firms are currently operating throughout the African continent, and the value of Chinese … I also serve as a senior fellow at European think-tank BRUEGEL and am a non-resident research fellow at Madrid-based political think tank Real Instituto Elcano. China has staked a lot on Africa. © 2021 China Africa Research Initiative at Johns Hopkins University’sSchool of Advanced International Studies, Home | About | Loan Data | Other Data | Debt Relief | Publications | Events | Media | Fellowships, Staff | Affiliated Researchers | Contact us• The CARI Blog: China in Africa: The Real Story », Learn more:• Carnegie Corporation of New York »• Economic & Social Research Council », Chinese Agricultural Investments in Africa, Download China-Africa Foreign Direct Investment data, country by country, 2003-2019 (Excel data). The data has been converted from 10,000 US$ to millions of US$. While many analysts focus on China’s landmark M&A … I hold a Ph.D. in economics from George Washington University and have published extensively in refereed journals and books. We collect annual figures for US outward direct investment for comparison from the Bureau of Economic Analysis (BEA), U.S. Department of Commerce. As recognition of my leadership thoughts, I was recently nominated TOP Voices in Economy and Finance by LinkedIn. I also serve as a senior fellow at European think-tank BRUEGEL and am a non-resident research fellow at Madrid-based…. I’m the chief economist for Asia Pacific at Natixis. The China-Africa Development Fund (CADFund), established in June 2007, is the first Chinese equity investment fund that focuses on investments in Africa. China’s commitment was reiterated in September 2018, when President Xi Jinping announced a further US$60bn funding package for Africa and exempted a portion of African debt maturing at the end of 2018. Nigeria is the most important country in Africa where China decides to invest for several decades now. Despite China ranking ninth by capital investment and seventh by project numbers, it was the second most prolific job creator. It seems clear that, without job creation, foreign direct investment into Africa might not be sustainable down the road given the continent’s population dynamics. China’s presence in Africa is, depending on who you talk to, great news for the continent or completely opportunistic, a form of “new colonialism.” Here’s a selection of articles and stories that capture the diversity of thinking on the subject. Without further information on the definition of the latter category, these two figures are not easily comparable. I write about China’s economy and its impact in the world. In fact, the FDI stocks sourced respectively from the U.K. and France into Africa are each still larger than the stock sourced from China. China began to increase significantly its investment in Africa at a time when Western companies, including those in the United States, were drawing back from Africa. China's investment in Africa: Everything you need to know Close Around 1,000 African business and political leaders are travelling to China for the first ever China-Africa Expo. Contrast, for instance, China’s mass donation of COVID-19-fighting equipment to Africa with the mistreatment African migrants have recently faced in … China, Senegal's second-biggest trading partner behind France, has built a major slice of recent Senegalese infrastructure including sports stadia in Dakar, roads, a theatre, a national wrestling arena and a museum of black civilization. Opinions expressed by Forbes Contributors are their own. China's President Xi Jinping inked a clutch of trade accords on July 21, 2018 on the first visit by a Chinese leader to Senegal in almost a decade. You may opt-out by. As shown in the chart below, Chinese FDI flows to Africa have exceeded those from the U.S. since 2014, as U.S. FDI flows have been declining since 2010. Much of China’s outbound direct investment (ODI) in sub-Saharan Africa is closely linked to trade. Another important aspect of Chinese investments in Africa is its sectoral concentration. In 2018, its trade with the continent rose by 19.7%, while increasing by just 12% with the rest of the world. I’m the chief economist for Asia Pacific at Natixis. Generally, China makes use of its aid and investment to support three core priorities: strategic diplomacy, ideological values and commercial benefit. “China’s strategic aspirations are causally related to its economic engage- ment in Africa and are mutually reinforcing each other,” opined Yun Sun, a director at the Stimson Center, during a congressional hearing on China’s presence and investment in Africa. By 2012, Africans had invested a cumulative $14.2 billion in China, a 43% increase from the $9.9 billion invested by 2009. China took advantage of opportunities and, to some extent, filled a void left by the West. However, unlike the world investment, investment in Africa has been at higher rates around mid-2000. Chinese FDI annual flows to Africa, also known as OFDI (“Overseas Foreign Direct Investment”) in Chinese official reports, have been increasing steadily since 2003. This is only the latest example of China’s burgeoning economic presence in Africa. Although this investment has gone a bit down compared to others from 2009, the average growth rate of Chinese investment in Africa is the second highest (57%) apart from that of Europe (65%). Even when focusing on investment only, it is quite clear that China’s investment in Africa is still at the early stages compared with that of key European countries that have a colonial past in Africa, especially France and the U.K. Africa is the fastest-growing region population-wise, but China’s FDI into Africa is creating fewer jobs per unit of investment, on average. Chinese involvement in sub-Saharan Africa's ports is substantial. On this basis, it is not surprising that that the job creation of Chinese FDI into Africa through greenfield investment is lower on average (only 1.78 people for every $1 million investment) than that of China’s greenfield investment into other regions of the world (2.24 people for every $1 million investment). From 2003 to 2019, the number has surged from US$ 75 million in 2003 to US$ 2.7 billion in 2019. Prior to 2007, the China Commerce Yearbooks (formerly the Almanac of China's Foreign Economic Relations and Trade) reported figures on “China Approved Overseas Investment”, available from 1998 to 2005. Xi is touring the region before heading to Rwanda, then South Africa ahead of a BRICs summit of developing nations. The relationship started in the early 1980s, as part of concerted diplomatic efforts promoting Chinese economic cooperation with Africa. There are not less than 404 developing projects all over Nigeria and around 240 firms. The earliest year for which we have reports of Chinese Overseas Direct Investment (ODI) stock/flow data is 2003, with this data first reported in the 2007 China Statistical Yearbook (CSY) and the Statistical Bulletin of China's Outward Foreign Direct Investment (SB). In other words, for China to be successful in its investment strategy in Africa, it will need to move from focusing its investment in natural resources and infrastructure to manufacturing, which is more labour-intensive. In conclusion, Chinese investment in Africa has noticeably increased over the past decade; as seen in Figure 1, investments toward Africa sharply … 2. Xi is touring the region before heading to Rwanda, then South Africa ahead of a BRICs summit of developing nations. From 2003 to 2019, the number has surged from US$ 75 million in 2003 to US$ 2.7 billion in 2019. Chinese FDI annual flows to Africa, also known as OFDI (“Overseas Foreign Direct Investment”) in Chinese official reports, have been increasing steadily since 2003. China, Senegal's second-biggest trading partner behind France, has built a major slice of recent Senegalese infrastructure including sports stadia in Dakar, roads, a theatre, a national wrestling arena and a museum of black civilization. Chinese foreign direct investment (FDI) into South Africa reached USD 15.2bn in 2017, or 19% of total FDI, 2 making the country the second-largest recipient of Chinese FDI in sub-Saharan Africa after Nigeria. It is China’s massive infrastructure projects, including dams, railways, ports and telecommunications networks, that capture most attention. the purchase of Canadian firm Addax at over $7 billion: Addax has several African properties, and properties in Iraq, but the investment appears as “Switzerland” which is where Addax was domiciled). Chinese engagement with Africa nations reflects these priorities. However, the bulk of FDI received by Africa is greenfield and Europe continues to stand out as the largest investor. Chinese investment will remain a significant feature of Africa’s financing landscape for the foreseeable future. One of the first misconceptions is the idea that China is making a massive amount of investments in Africa. During that same year, China’s investments on the continent climbed to $5.4bn, whereas Latin America received a mere $1.9bn in funding. For such inward FDI to be welcome, and thus sustainable, its nature will need to change so as to create more jobs. While many analysts focus on China’s landmark M&A deals in Africa, especially in the energy and metals industries, the reality is that China’s project finance in African countries is nearly ten times as large. China’s investment in Africa. However, the official data does not tell us all that much. 3. Chinese FDI in Africa Data Overview. This, in itself, could be one of the key problems that China may be facing when continuing to invest in Africa in the future. One of the first misconceptions is the idea that China is making a massive amount of investments in Africa. Investment in Africa shows a similar pattern. China’s dominance has been more obvious as an acquirer of assets (M&A), while EU and U.S. FDI have been more volatile, with some large divestments from 2016 to 2018. Flows peaked in 2008 at US$ 5.5 billion because of the purchase of 20% of the shares in Standard Bank of South Africa by Industrial and Commercial Bank of China (ICBC). The top 5 African destinations of Chinese FDI in 2019 were Democratic Republic of Congo, Angola, Ethiopia, South Africa, and Mauritius. (Klaver and Trebilcock 2011, Brautigam 2009, Keenan 2008) Some have pointed out that the country’s focused interest in Africa’s energy and mineral resources, even if true, is not that different from the FDI traditionally attracted to the continent. However, the definition appears to have changed, and the two series (ODI data and “Approved Overseas Investment” data) are not consistent. A Shift From Petroleum Power To Minerals Power, Australia Reviews Lease Of Darwin Port To Chinese Billionaire’s Firm: Report, Apple AirTag Review: Works Well, Maybe Too Well, ‘American Factory’ Owner Fuyao Glass To Raise $550 Million, Eyes Solar Market, China Holds Promise For Global Businesses Despite Uneven Covid Recovery: Authors, China’s project finance in African countries is nearly ten times as large. On the one hand, Chinese investment is usually overestimated by others (such as FDIntelligence), because their researchers appear to record the initial agreements announced at press conferences, assuming this is an FDI commitment and will actually lead to flows of money. China's investment in Africa: Everything you need to know - BBC Africa - YouTube. © 2021 Forbes Media LLC. Its investment there has skyrocketed in recent years from $7 billion in 2008 to $26 billion in 2013, according to figures cited at a Wharton Africa Business Forum held … All Rights Reserved, This is a BETA experience. First, as already noted, at diplomatic level China courts Africa to secure support for One China … In other words, if we were to calculate inward FDI per capita, Africa would be the region of the world with the least inflows and, given their population trends and the current level of development, clearly with the largest needs. BOX 2.1 Linkages between China and Sub-Saharan Africa The author of this box is Tehmina S. Khan with contributions from You can edit the text in this area, and change where the contact form on the right submits to, by entering edit mode using the modes on the bottom right. Thus, it is fair to say that China is catching up in accumulating outward FDI into Africa to a level which is commensurate with its economic size and long-term political ties with the African region. Investment is at the heart of Africa’s needs, being the continent with the fastest growing population, but receiving less foreign direct investment (FDI) than any other emerging region, except for Central-Asian transition economies. In other words, actual investment by China in Africa is much smaller than debt-generating flows and, in particular project finance. The Leukemia & Lymphoma Society BrandVoice, The Making Of Hong Kong’s Largest Online Landlord: HKTV, Singapore Reviews Travel Bubble With Hong Kong As Covid-19 Cases Increase, Billionaire Chairul Tanjung’s CT Corp To Receive $916 Million Investment From Mitsui & Co, Goodbye OPEC, Hello OMEC. In other words, for China to be successful in its investment strategy in Africa, it will need to move from focusing its investment in natural resources and infrastructure to manufacturing, which is more labour-intensive. CARI has combined the ODI figures from both the China Statistical Yearbooks and Statistical Bulletins of China's Outward Foreign Direct Investment of various years. Investment China is the largest developing country foreign investor in Africa (UNCTAD 2013). Senegal's President Macky Sall presents China's President Xi Jinping a ceremonial key during the... [+] inauguration of the national wrestling arena on July 22, 2018, in Dakar. Though China loaned a whopping $95.5bn on the continent between 2000 and 2015, researchers at the China Africa Research Initiative found most of this was spent addressing Africa… Although Africa’s US$100bn plus investment financing gap may not be met solely by Chinese financing, China’s role is seen by many as crucial. 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