Home > Overseas Investment News > China becomes a key economic player of Africa
China becomes a key economic player of Africa
2013-06-14
Brief:In the last decade, China's investment in Africa by the world's second-largest economy has surged to $2.9 billion from $75 million.
Douglas Zeng, a senior economist who focuses on the global market and the Chinese and African economies with the World Bank, says while China is rapidly emerging as a key economic player in Africa, its overseas activities are closely scrutinized by international media, research institutions, and donor agencies, "yet much of the conventional wisdom about Chinese development finance rests on untested assumptions, individual case studies, and incomplete data sources".
 
In 2006, China announced that it would help establish as many as 50 special economic zones in Africa. So far, China has developed eight of those, including six in Sub-Sahara Africa.
 
"These zones can help jump-start the manufacturing sectors in Africa," says Zeng.
 
"Some of these zones have made good progress in terms of building infrastructures and attracting investments," Zeng notes, adding that they also face some challenges, including improving the management capability of the zone developers and difficulties in coordination with host government counterparts.
 
There were more than 1,600 Chinese development finance projects worth $75 billion in 50 African countries from 2000 to 2011, according to data from the Center for Global Development, a Washington-based non-profit think tank that focuses on international development, and AidData, which collects information on individual foreign aid projects financed by governments and aid agencies. Health, education and transport and storage projects received the largest Chinese funding.
 
"The sectoral distribution of Chinese aid to Africa stands in contrast to the pattern of traditional donors, which have channeled the lion's share of their funding - nearly 50 percent - into social and humanitarian sectors. In this sense, Chinese aid is complementary to assistance from Western donors," says Zeng.
 
Most recently, China's HNA Group, the largest privately owned air transport company and the fourth-largest airline in terms of fleet size in China, signed a partnership with the United Nations World Food Program to help provide take-home rations to promote girls' education under its school meals program in Ghana.
 
Last year, HNA Group extended its Brightness Action - a 10-year charitable program the company launched with Beijing Tongren Hospital in 2004 to tackle avoidable blindness - to the African continent. The program helped restore the vision of more than 1,400 people in Zimbabwe, Malawi and Mozambique.
 
HNA Group also has business projects in Africa. Last year, it signed a cooperation agreement with the Ghanaian Africa World Airlines to launch a joint venture co-financed with the China Africa Development Fund among others. It was the first-ever aviation investment made by a Chinese company in Africa.
 
HNA's involvement in Africa reflects a new trend of Chinese investment of carrying out corporate social responsibility on the continent, and it could foreshadow where Chinese investment is heading.
 
"China's investments in Africa have come primarily from state-owned companies. In the future one key area to look out for is private Chinese companies and individuals making investments in Africa," says Ranaweera.
 
"The next great wave will come when medium to large private enterprises from China deploy capital in partnership with Africans to make money," he says. "An example of this might be in the future a large Chinese property developer links up with an African partner to develop commercial and residential real estate in a fast-growing African city."

Related News:
China in Africa: Developing a continent
China is the best partner of Africa

China Daily
Relevant Information