CONCLUSION: What Drives China’s Growing Role in Africa?

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References: Stock Market Development in Sub-Saharan Africa - By International Monetary Fund

This paper intends to provide an assessment, based on fractional information, of China’s
economic involvement in Africa and to identify the forces shaping burgeoning China-Africa
economic relations. The study is undertaken against the background of a rapidly changing
landscape of international trade and finance that has eclipsed traditional aid flows to middleincome
countries, making Africa ever more central for development finance.
For Africa, China has been a market, a donor, a financier and investor, and a contractor and
builder. While aid historically was of major importance, two significant changes have
occurred since the turn of the new century. Because trade and investment have become much
more significant in volume than aid flows, economic relations between China and Africa are
clearly commercial rather than aid-driven. Meanwhile, the private sector has stepped to
center stage. Here China’s foreign economic relations mirror changes in its domestic
economy. China-Africa economic exchanges have become much more decentralized and
broad-based.
The paper identifies four factors associated with recent changes in China’s economic
engagement with Africa: Chinese government policies, growing Chinese and African
markets for each other’s exports, Africa’s demand for infrastructure, and differential China’s
approach to financing. China’s state financial institutions have been instrumental in
cementing the new, commerce-based economic ties. In the process, they are helping correct
chronic undervaluation of Africa by investors and helping fund new investments in Africa’s
export and infrastructure sectors.
Africa will become an increasingly attractive market as incomes rise and progress in regional
integration makes its markets even more attractive. It will also become a key destination for
FDI, and it will continue to need infrastructure. Together these powerful market forces may
put Africa-China economic relations firmly on a commercial footing. Both public and private
sectors have a part in ensuring that the expanding trade and investment ties are mutually
beneficial and contribute to sustainable growth and development in Africa. The impact of
possible changes in Chinese demand on African terms of trade, trade patterns, and the
economic prospects of countries in Africa are worthwhile topics for further research.

IMF Working Paper
African Department
What Drives China’s Growing Role in Africa?
Prepared by Jian-Ye Wang
October 2007

V. D. The Future of China-Africa Economic Relations: FACTORS INFLUENCING THE GROWING TIES

What Drives China’s Growing Role in Africa?

II.E. Contract Labor and Other Services: TRADE AND CAPITAL FLOWS BETWEEN CHINA AND AFRICA

II.a Merchandise Trade: TRADE AND CAPITAL FLOWS BETWEEN CHINA AND AFRICA

III. C. Commercial Policies: THE ROLE OF CHINA’S PUBLIC SECTOR

IV. C. Private Contractors and Builders: THE ROLE OF THE PRIVATE SECTOR

IV. A. Private Traders: THE ROLE OF THE PRIVATE SECTOR

IV. B. Private Investors: THE ROLE OF THE PRIVATE SECTOR

V. A. Markets for Exports: AID VS. COMMERCE: FACTORS INFLUENCING THE GROWING TIES

II.D. Foreign Direct Investment: TRADE AND CAPITAL FLOWS BETWEEN CHINA AND AFRICA

II.C. Other Debt-Creating Financial Flows: TRADE AND CAPITAL FLOWS BETWEEN CHINA AND AFRICA

Changing “Brand Africa”, an International Trade Forum magazine feature

VII G. Strengthen Education: PROMOTING STOCK MARKET DEVELOPMENT IN AFRICA

V. B. African Demand for Infrastructure: AID VS. COMMERCE: FACTORS INFLUENCING THE GROWING TIES

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III. A. China’s African Policy and New Commitments for 2007–09: THE ROLE OF CHINA’S PUBLIC SECTOR

V. C. China’s Approach to Financing: AID VS. COMMERCE: FACTORS INFLUENCING THE GROWING TIES

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References: What Drives China’s Growing Role in Africa?

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References: Stock Market Development in Sub-Saharan Africa - By International Monetary Fund

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The IMF is an international organization of 185 member countries. It was established to promote international monetary cooperation, exchange stability, and orderly exchange arrangements; to foster economic growth and high levels of employment; and to provide temporary financial assistance to countries to help ease balance of payments adjustment. Since the IMF was established its purposes have remained unchanged but its operations—which involve surveillance, financial assistance, and technical assistance—have developed to meet the changing needs of its member countries in an evolving world economy.
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