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Asian Drivers

China's growing economic presence in Africa

Does China’s presence in Africa benefit the continent?

Authors: H. Besada; Y. Wang; J. Whalley
Publisher: Centre for International Governance Innovation, 2008

Full text of document

This policy brief documents the size and rate of change of China’s growing presence, focusing primarily on trade and finance. It also discusses the rate of change and looks at projections of its growth.

Trade between Africa and China grew from US$10.6 billion to US$73.3 billion between 2000 and 2004, with sub-Saharan Africa accounting for US$7 billion and US$59 billion for these two years respectively. Similarly, Chinese foreign direct investment (FDI) stock in Africa has grown from US$49 million in 1990 to US$2.6 billion in 2006. This corresponds approximately to a 30 percent growth in annual trade and investment since the late 1990s between Africa and China. China appears to be an increasingly substantial engine of growth on the African continent, and although the levels are still modest for now, they are growing rapidly. Some sources however, claim that despite all the benefits, China’s growing presence is also co-mingled with responses to attempts to bring in disciplinary measures against corrupt practices at home and, essentially, this amounts to exported corruption.

Concluding points are that:

  • tales of Chinese enterprises approaching African governments, offering reserve-financed low interest loan infrastructure projects, on the condition that contracts are awarded to specified Chinese enterprises, tend to underscore concerns regarding China’s practice 
  • within the bigger picture, however, such claims have to be seen alongside the large benefits flowing to Africa from China’s involvement - whether or not corruption at home motivates some amount of investment, Africa seems to benefit from increased Chinese trade and Foreign Direct Investment (FDI) flows. Meanwhile, labour adjustments from Chinese FDI appear to be small, especially given the large FDI in oil and resources 
  • the bottom line would seem to be that large trade and investment benefits have already accrued in Africa, resulting from China’s growing presence, and more seem poised to follow - China in Africa is therefore seemingly a highly positive story for Africa and offers an even more promising future for the continent.