Beyond the Commodities Boom – China’s Shifting Role in Africa

China’s strategy in Africa has been largely based on resource extraction and is generally characterized by offering mostly yuan denominated loans in exchange for permitting Chinese state-owned enterprises access to resources.  Although this approach has precipitated some benefit to African countries, including countries such as Zimbabwe, the advantage is often squarely in China’s favor. Most jobs related to these investments are given to Chinese workers that are relocated into Africa and loans are often given to ineffectual or corrupt governments, without any conditions relating to better governance practices. 

 

china_zimbabwe.jpg
Image: Rory Boon (Altered from original)

 

As China’s economy slows, and rebalances from investment driven growth to consumption, so too will its demand for resources. This could harm political regimes in Africa that have grown dependent on Chinese resource extraction deals. However, the fact that Chinese leaders are visiting Africa this month indicates that China still considers a strategic role in Africa advantageous. Xi Jinping will likely be seeking new markets for Chinese manufactured goods, access to cheaper labor and production capacity, and securing precious metals, such as Zimbabwe’s gold, diamonds and other minerals that are in consumer manufacturing.

As Chinese demand cools, so too will its investment in Africa. China’s Ministry of Commerce believes that Chinese investment in Africa has fallen 40% so far this year. That being said, China continues to be Africa’s largest trading partner and still requires a vast amount of resources to fuel its economy. Aside from economic interests, China would like to see its sphere of influence expanded to include resource-rich industrializing countries, as demonstrated by the Xi Jinping’s monetary pledge for the African Union’s defense force, as well as the deployment of a Chinese infantry battalion in oil-rich South Sudan.     

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.

Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest X Download Fullscreen