#Nc credit ze drivers#

Smaller African economies received a higher Chinese FDI share relative to their GDP share than larger economies. In figure 2, we observe that Chinese FDI allocation is more evenly distributed – more egalitarian – than countries’ natural GDP divergence.

#Nc credit ze drivers#

To further examine whether a country’s economic vibrancy and scale are drivers for Chinese FDIs, we assume Chinese FDI share (Chinese FDI in a particular African country as a share of Chinese aggregate FDI in Africa) correlates to a country’s GDP share (GDP for a particular African country as a share of Africa’s continental GDP). It can also be partly explained by the fact that larger economies with more sophisticated industrial infrastructure and economies of scale tend to receive higher levels of foreign direct investments. The high levels of Chinese FDIs in these countries can be partially attributed to the attractiveness of rich resources.

Six resource-rich countries – Nigeria, South Africa, Ethiopia, Kenya, Ghana, and Tanzania – are also among some of Africa’s largest economies by GDP in 2020. It does not explain why South Africa, with resource rents of 3.9%, relatively low in Africa and far lower than DR Congo’s 46%, receives the highest share of Chinese FDIs by stock. However, if we were to examine Chinese FDIs across African countries on a country level, not a systemic level, resource endowment alone does not sufficiently explain the discordance that lie between the degree of African countries’ natural resources reliance and the level of Chinese FDIs received.įor example, the resource-based investment theorem does not explain why Libya, with resource rents of 44%, does not receive a high level of Chinese FDI. Data source: 2020 Statistical Bulletin of China’s Outward Foreign Direct Investment, Ministry of Commerce, China The resource-rich countries receive an overwhelming share of Chinese FDIs in Africa. If we separate African countries into two groups – the resource-rich countries and the resource-poor countries – the nature of resource endowment (rich or poor) is a strong explainer of the divergent distribution of Chinese FDIs across Africa. Twelve resource-rich African countries – South Africa, DR Congo, Zambia, Ethiopia, Angola, Nigeria, Kenya, Zimbabwe, Algeria, Ghana, Tanzania, and Mozambique – housed nearly three-quarters of China’s FDI by stock in 2020, as seen in figure 1. If Chinese investments solely aim at resource exploitation, one may assume that resource-rich African countries should receive abundant Chinese investments and resource-poor countries receive little. I strive to answer the above questions by initially examining the obvious: the connection between Chinese Foreign Direct Investments (FDIs) and Africa’s resource footprint. How much Chinese investments are embedded in non-resource-producing African countries, and to serve what purpose?

Rarely do we also examine China’s investment behaviour in countries that are not richly endowed with natural resources compared to the resource-rich ones. equity investments and offtakes.Įquity investment enables China to control upstream production, guarantee supply priority to the home market, operate vital transport links, and in some instances, monopolise the global supply – powers that an importer is limited to exercise.

Yet, in the public domain, we rarely identify how much of the Chinese trades are pure product imports vs. These include oil, liquefied natural gas, timber, gold and copper, uranium, and precious base metals such as cobalt and lithium. China imports massive quantities of vital natural resources from sub-Saharan Africa.