Chinese Investment in Africa

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Since the turn of the century China and Africa have rapidly expanded their political and economic relations and in recent years China has increasingly focused on securing resources in order to fuel its economic growth by turning to the African continent. In line with this strategy China has used investment to help many African countries develop their fledgling oil sectors, while benefiting from oil imports through advantageous trade deals.[1]

As of 2011 Africa was supplying 35% of China’s oil and two-way trade between the countries grew by 39% over 2010.[2] The Heritage Foundation estimates that between 2005 and 2010 about 14% of China’s investment abroad was made in sub-Saharan Africa.[3]

Political commentator Patrick Corcoran, writing for news syndicate Policy Mic, argues that China’s investment strategy is a simple one: China will build infrastructure in exchange for oil. The Director of the China-Africa Network also commented that the Chinese are the biggest builders of infrastructure on the continent, however Chinese investment in Africa has met with some domestic resistance.[4]

China's strategy has been to access resources in locations deemed too politically risky by Western companies and invests heavily in African mines, oil exploration and auxiliary infrastructure such as pipelines, roads, railways, power plants and transmission lines. Sudan is typical of this strategy, where China's CNPC expanded when its Western counterparts withdrew in outrage over the civil war.[5]

Resource-backed development loans

Since 2004 China has concluded several deals on resource-backed development loans with several resource-rich countries in Africa, totalling nearly $14 billion. Reconstruction in Angola was helped by three oil-backed loans from Beijing, with China pledging to build roads, railways, hospitals, schools and water systems. Nigeria took out two similar loans to finance gas and electricity projects, and in 2010 Chinese workers were building a hydropower project in Ghana, to be repaid in cocoa beans.[6]

In Angola Chinese loans of $2 billion and $2.4 billion from Eximbank (the Export-Import Bank of China) for example, were tied to infrastructure investments such as road building, railway rehabilitation or construction of schools and houses.[7] EximBank is not the only Chinese policy bank which supports trade and investment in Africa. However it is quickly expanding its exposure in Africa. In May 2007 the bank pledged to commit approximately $20 billion for loans to Africa over the next three years. This compares to only $4.8 billion of World Bank-approved projects for Africa in 2006.[5]

A 2011 report by the Economic Intelligence Unit (EIU) asserted that Ghana's decision to allow the use of 70% of future oil revenue as collateral for borrowing costs was causing concern. The report warned that if not managed properly, there would be little benefit from the US $3bn loan package for infrastructure from China, other than greater debt levels and greater potential for corruption.[8]


China has faced growing international criticism since stepping up its engagement with African countries over its allegedly exploitative business practices, as well as a failure to promote good governance and human rights in its operations.[9]

According to the Economist Africans have become disillusioned with how the Chinese destroy national parks when exploring for resources and disregard health and safety rules, alleging that some workers are even shot by managers. Reports claim that roads and hospitals built by the Chinese are often faulty, partly because of bribes involved in the contracting process, and that Chinese engagement is exacerbating Africa's struggle with corruption.[2]


  1. "Expanding China-Africa Oil Ties" Council on Foreign Relations, 8 February 2012.
  2. 2.0 2.1 "Rumble in the jungle" Economist, 20 April 2011.
  3. "The Chinese are Africa" Economist, 22 April 2011.
  4. "Africa's Oil, China's Investment" Policy Mic, 22 April 2011.
  5. 5.0 5.1 "China’s Environmental Footprint in Africa" SAIS, 2008.
  6. "Africa’s Eastern Promise" Foreign Affairs, 2008.
  7. "Is Chinese Investment Good for Africa?" Council on Foreign Relations, 20 February 2007.
  8. "Ghana cautioned on Chinese $3-billion loan arrangement" The Africa Report, 13 February 2012.
  9. "Expanding China-Africa Oil Ties" Council on Foreign Relations, 8 February 2012.