Chinese investment has toured all corners of the African continent seeking natural resources, but must now take a different path to help build capacity, infrastructure and sophisticated markets, writes George W Russell
There are more than 2,000 Chinese-invested companies in Africa, ranging from state-owned giants such as PetroChina to small-scale, private farms. The common thread – despite Africa’s lack of infrastructure, skilled labour and advanced markets – is that Chinese companies see great opportunities ahead.
The driving force has been, of course, Africa’s vast natural resources and China’s seemingly insatiable demand for them. “It is expected that by 2020, only four or five countries in the region will not be involved in mineral exploitation of some kind, such is Africa’s abundance of natural resources,” the World Bank observed in a recent report.
However, as China’s seemingly unstoppable growth trajectory has slowed recently, questions as to the future of the Sino-African relationship have emerged. A report by an International Monetary Fund (IMF) mission led by economist Paulo Drummond noted that trade with China comes with risks. “Although rising trading links with China have allowed African countries to diversify their export base across countries, away from advanced economies, they have also led [sub-Saharan African] countries to become more susceptible to spillovers from China,” Drummond noted.