As per QNB’s weekly economic commentary China’s investment in Africa is rapidly outstripping the regional position of the US. Last year, Africa-China trade was over three times higher than US -Africa trade. Chinese direct investment (FDI) flows to Africa have surpassed those from the US for the first time in 2014.
From 2011 to 2016, outstanding Chinese FDI in Africa increased by 130 per cent to reach $53 bn, against flat levels from the US and UK. The largest recipients of Chinese FDI were, respectively, South Africa ($6.5bn), Congo ($3.5bn), Algeria ($2.5bn), Nigeria ($2.5bn), Zambia ($2.5bn) and Zimbabwe ($1.8bn).
The three factors that contribute to the spree of Chinese FDI in Africa include China’s resource-intensive growth coupled with Africa’s relatively untapped natural wealth; China’s ‘financial diplomacy’ or bilateral loans which are a major source of support for Chinese activities in Africa and cost-effectiveness of Africa for large Chinese manufacturers.
