Chinese Investment in Africa: Surprisingly Small, but Growing Fast

A China in Africa Podcast

It’s a widespread misconception that just because China is Africa’s top trading partner, it’s also the continent’s largest foreign investor. In fact, China ranks seventh overall in FDI, far behind the United States, long Africa’s largest source of foreign investment.

That may soon change, though, due in part to China’s rapidly evolving economy. With production costs rising steadily at home, Chinese firms now are looking aggressively to shift manufacturing overseas, particularly in places across Africa.

Separately, the Chinese consumer may help drive this trend as well. Amid a faltering stock market and a pronounced slowdown in China’s domestic economy, Chinese shoppers are likely to hold back on spending in the near term. This will likely accelerate China’s “Going Out” policy as companies search abroad for profits to make up for the slack back home.

Brookings Institution China scholar David Dollar recently co-wrote a new report on Chinese FDI trends in Africa. He joins Eric and Cobus to explain where the Chinese are investing on the continent and in what sectors.