Chinese overseas trade and investment in Africa

19 Apr

China has been investing large amounts of its vast foreign exchange reserves in overseas projects in recent years. While this investment has been mostly in the United States and Europe, since the year 2000 we have seen a rapid increase in Chinese trade and investment in developing nations, such as those in Africa. Chinese investment in African countries is driven by its low wage rates caused by under-development and its wealth of natural resources and energy. China sees Africa as an expanding market for Chinese goods and has moved some of its manufacturing into African countries such as South Africa, Nigeria and Algeria in order to reduce costs. Many Chinese State Owned Enterprises have been making large investments into Africa, some of which China National Offshore Oil Company (CNOOC), China National Petroleum Corporation (CNPC) and China Petroleum & Chemical Corporation (Sinopec). Such investment not only offers many benefits to the Chinese economy but it has helped improve the economic development of Africa.

Trade and economic cooperation between China and Africa increased significantly between the year 2000 and 2009; yearly statistics show that bilateral trade rose from 10.6 billion to 91.07 billion USD, while China’s investment in Africa increased from 220 million USD to 1.44 billion USD. China used a number of methods in order to facilitate this increase in trade with Africa, such as the removal of tariffs on products exported from the least developed African countries, which helped them achieve steady economic growth. It wasn’t only the level of investment that rose; there was also an increase in China’s assistance to Africa, focusing on social welfare and poverty alleviation, healthcare, education and training, and infrastructure. What’s more they launched trade missions to help increase the continents exports to China and developed training programs for African inspection. As a result of these efforts from China, Africa experienced sustained economic growth and an improved investment environment and China is now one of Africa’s most important trade and economic partners.

Many western governments have expressed concern that China is investing too much in Africa and some commentators have even used the term ‘colonialism’, claiming that Beijing is depleting away resources to drive its own economic growth without offering anything in return. In response to this allegation the People’s Daily newspaper said, “Beijing focused on helping build the continent’s productive capacity by improving its infrastructure and boosting the manufacturing sector, rather than involving the so-called “resource-grabbing practice”. However there is evidence that suggests that China has only brought benefits to Africa. President Hu Jintao revealed that China has built over 100 schools, 30 hospitals and 30 anti-malaria centres in Africa; it has trained close to 40,000 African personnel and provided over 20,000 government scholarships, as well as meeting the promise of providing $15bn of preferential lending to Africa. In fact China has always adhered to its principle of equality and mutual trust and trade and economic cooperation between the two has not only played a significant role in promoting their respective progress, but has also helped to draw global attention and support to Africa’s development. It is for this reason that many Chinese officials put the allegations from the West down to a fear that China is building better relationships with the continent than the West has done and undermining Western influence in Africa.

Sources:
http://www.businessinsider.com/heres-whats-driving-chinas-investments-in-africa-2012-6#ixzz20BPbeYo7

http://www.bbc.co.uk/news/world-asia-18901656

http://www.focac.org/eng/zfgx/t820242.htm

http://www.focac.org/eng/zxxx/t832788.htm

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One Response to “Chinese overseas trade and investment in Africa”

  1. lo2g11 April 21, 2013 at 9:12 pm #

    There has been increasing discussion concerning a new scramble for Africa, with the scope of globalisation increasing; countries other than those deemed to be in the West are benefiting from the natural resources found in many African countries. China is an example within the commerce of oil in several countries in Africa such as Sudan, Nigeria and Angola (Yates, 2012).
    Dr Yeh article talks of Chinese aid, trade and investments in Latin American countries, which are considered by some to be in America’s back yard. An argument can be made that China’s aid is driven by self-interest and can highlight their involvement in the current scramble for Africa. Or perhaps rather than this being illustrative of the fact that their following the lead of the West: colonisations as the above piece suggests. It could be argued that China’s actions are merely a consequence of globalisation, and the fragile state of many African’s governments and economies, can be deemed as a permit for some of the things that China has been accused of.

    Bibliography

    Guerrero, D. C. and Manji, F. China’s New Role in Africa and the South: A search for a new perspective

    Yates, D. A. (2012) Public Policy and Politics: Scramble for African Oil: Oppression, Corruption and War for Control of Africa’s Natural Resources. Pluto Press

    Yeh, H (2008) China’s growing foreign aid to Latin America and its implications. Journal of Asia-Pacific Studies, 1, (6), 1-36.

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