II.D. Foreign Direct Investment: TRADE AND CAPITAL FLOWS BETWEEN CHINA AND AFRICA
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
IID Foreign Direct Investment TRADE AND CAPITAL FLOWS BETWEEN CHINA AND AFRICA - To learn more about this author, visit International Monetary Fund's Website.
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