8 Facts about China's Investments in Africa | Brookings (2024)

FAQs

What are the 3 reasons why the Chinese invest in Africa? ›

They point out seven ways Chinese investment contribute to African growth: commodity prices (China's demand for resources raised commodity prices), capacity to extract (many African countries lack the capacity to extract their own resources), infrastructure (China's contribution to African development is arguably most ...

Since its inception, China-Africa Development Fund provided active support for economic and trade cooperation between China and African countries, focusing on a group of agricultural, infrastructure, manufacturing, industrial park and resource development projects.

Chinese entities have invested in the finance, energy, communication, manufacturing, transport, and mining sectors, among others. Beijing's entities are also setting their sights on the steel sector after striking agreements with the South African government to build steel plants in the country.

For Africa, China's economic expansion presents opportunities. China's demand for commodities, such as oil, minerals and agricultural products, has provided African countries with lucrative export markets, contributing to economic growth and infrastructure development.

China is now Africa's biggest trading partner, with Sino-African trade topping $200 billion per year. Over 10,000 Chinese firms are currently operating throughout the African continent, and the value of Chinese business there since 2005 amounts to more than $2 trillion, with $300 billion in current investments.

China's need for oil and other resources and a market to sell its products has driven its investment in Africa.

Beijing's pursuit of influence in Africa goes beyond economic interests. China's investments in infrastructure are coupled with efforts to secure political support and access to resources.

“Chinese grants have been used to build small and medium-sized social welfare projects ... there are concessional and standard loans from China to African countries to help them to build infrastructure,” she said. “Over the last 20 years, the total Chinese loans to Africa is $160 billion or nearly $7 billion per year.

China is presently involved in infrastructure project in 35 African countries. A concentration of projects is to be found in Angola, Nigeria and the Sudan. However, China is planning a new range of projects in other countries, especially in the DRC.

China's exports to Africa were historically mainly light industrial products, food, chemical products, native produce and animal by-products. Since 2000, the export of machinery, automobiles and electronic items has been crucial, with product quality and technology markedly improved from earlier years.

How much of Africa's debt does China own? ›

China has become Africa's biggest bilateral lender, holding over $73 billion of Africa's debt in 2020 and almost $9 billion of private debt. This increased lending to the continent has drawn significant attention and criticism.

Chinese mining and battery companies have invested $4.5 billion in lithium mines in the past two years and are behind much of Africa's lithium projects in countries like Namibia, Zimbabwe and Mali. It is estimated that China could secure one-third of the world's lithium mining capacity by 2025.

Chinese investments create jobs, increase the skills of the local labor workforce, increase economic growth, improve industrialization by upgrading machinery, and provide manufactured goods at an affordable price.

A new update to the Chinese Loans to Africa (CLA) Database, managed by the Boston University Global Development Policy Center, estimates that from 2000-2022, 39 Chinese lenders provided 1,243 loans amounting to $170.08 billion to 49 African governments and seven regional institutions.

With China as a new important trading partner, African countries were provided with an additional market for exports and imports. It enabled African nations to diversify foreign trade and become less dependent on trade with the US or EU.

From 2001 to 2022, PRC financial institutions provided more than $170 billion in credit, loans, and grants to African nations, primarily to fund infrastructure projects tied to the PRC's Belt and Road Initiative.

Chinese FDI to Africa has increased at a rapid pace since 2004, when the Government of China adopted a series of measures, including investment funds, to encourage investment overseas.

The continent has a young population eager to work. Stable governments welcome the opportunity to create jobs, improve infrastructure, and become a part of the global economy.