Wednesday 12 December 2007

What Drives China's Growing Role in Africa?

China's role in Africa has important economic and political implications. In one sense, China is filling a gap left by the West who tend to tie aid and FDI to good governance. Therefore China could be criticised for helping to support corrupt and inefficient regimes. Finally, Chinese involvement is part of a wider "land grab" for resources. China knows that to support its current rapid rate of growth it will require huge quantities of natural resources. Africa at the moment provides easy pickings. The reaction of Western multinationals will be interesting to watch as they try to free themselves from the constraints Western governments to ensure they continue to win contracts against the Chinese. Not easy.


"What Drives China's Growing Role in Africa?"
IMF Working Paper No. 07/211

International Monetary Fund (IMF) - European

Full Text:

ABSTRACT: What role does China play in Africa's development? What drives China's increasing economic involvement in the continent? This paper attempts to provide a quantified assessment of China's multifaceted influence as market, donor, financer and investor, and contractor and builder. Though in the past official development aid predominated, the paper argues that government policies, markets for each other's exports, Africa's demand for infrastructure, and differences in China's approach to financing have together moved commercial activities - trade and investment - to the center of China-Africa economic relations. While China's public sector, state financial institutions in particular, has been instrumental in the process, the influence of its private sector is increasing. Implications for the future of China-Africa economic relations are briefly noted.

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