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Chinese Investment in Africa: Surprisingly Small, but Growing Fast

It’s a widespread misconception that just because China is Africa’s top trading partner, it’s also the continent’s largest foreign investor. In fact, China’s ranks seventh overall in FDI, far behind the United States that has long been Africa’s largest source of foreign investment.

The Ernst & Young 2015 Africa Attractiveness Survey

That may soon change, though, due in part to China’s rapidly evolving economy. With production cost steadily rising at home, Chinese firms are now aggressively looking to shift manufacturing overseas, particularly in places like Africa.

Separately, the Chinese consumer may help drive this trend as well. Amid a faltering stock market and a pronounced slow down in the domestic economy, Chinese shoppers are likely to hold back on spending in the near term. This will likely accelerate China’s “Going Out” policy as companies search abroad for profits to make up for the slack back home.

Brookings Institution China scholar David Dollar recently co-wrote a new report on Chinese FDI trends in Africa and joins Eric & Cobus to explain where the Chinese are investing on the continent and in what sectors.

Show Notes:

About David Dollar

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David Dollar is a senior fellow with the Foreign Policy and Global Economy and Development programs in the John L. Thornton China Center. He is a leading expert on China’s economy and U.S.-China economic relations. From 2009 to 2013 he was the U.S. Treasury’s economic and financial emissary to China.

In that capacity, he facilitated the economic and financial policy dialogue between the United States and China. That included the formal meetings, notably the annual Strategic and Economic Dialogue, as well as constant exchanges between the treasury department and Chinese economic policymakers at all levels. Based at the U.S. embassy in Beijing, Dollar served as treasury’s eyes and ears on the ground and reported back to Washington on economic and policy developments in China.

Dollar worked at the World Bank for 20 years, and from 2004 to 2009, was country director for China and Mongolia. His other World Bank assignments primarily focused on Asian economies, including South Korea, Vietnam, Cambodia, Thailand, Bangladesh, and India. From 1995 to 2004, Dollar worked in the World Bank’s research department.

Prior to his World Bank career, Dollar was an assistant professor of economics at Univeristy of California Los Angeles, spending a semester in Beijing teaching at the Graduate School of the Chinese Academy of Social Sciences. He has a doctorate in economics from New York University and a bachelor’s in Chinese history and language from Dartmouth College. He has written extensively about economic reform in China, globalization, and economic growth.

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