China’s direct investment in Africa, as reported by the National Bureau of Statistics of China, amounted to US$392 million in 2005, up from US$317 million in 2004. Data from other sources show significantly higher figures: in 2004, Chinese FDI was estimated to be more than US$900 million; total FDI in Africa was US$15 billion (Table 2). China’s Ministry of Commerce puts China’s direct investment to Africa for 2000–06 at US$6.6 billion. Among the 800 Chinese enterprises investing in Africa, only about 100 are state-owned. The rest are private businesses with interests ranging from trade, manufacturing and processing, services, and communications to agriculture and natural resource development. 17 Chinese official statistics may not fully capture the true magnitude of direct investment by Chinese entities in African countries. The dividing line between trade and project financing by China’s financial institutions and direct investment by Chinese enterprises is often unclear. Data on “overseas investment” as recorded by China’s National Bureau of Statistics may not be comprehensive.18 In addition, China’s private enterprises also rely heavily on retained earnings and informal arrangements rather than capital markets and bank borrowing to finance investments. For these and other reasons the FDI of China’s private enterprises may be under-recorded.
FDI between Africa and China flows both ways (Figure 6). Chinese statistics show that a large share of African FDI in China is from Mauritius. The flows recorded may include investments originating outside Africa (Broadman, 2007, pp.100).
Worth noting is that South African firms have been expanding actively into the Chinese market, using their management and technological strength (e.g., in mining, paper, and consumer goods) and their experience of operating in developing countries.
IMF Working Paper African Department What Drives China’s Growing Role in Africa?
Prepared by Jian-Ye Wang October 2007
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