Commentary: China and Africa

China has a long historical connection to the African continent. In recent years, that relationship has been changed with economic transactions and transfers of wealth on an unprecedented scale. Consider for example the $4 billion invested in the Mombasa-Nairobi Railway and various hydro-power projects with a combined value of more than $220 billion (See also Shinn 2012).1 China has a vast supply of funding, and Africa has a deep need of development funds. However, possession of resources and need is not one sided. Africa has an abundance of undeveloped resources including fuels such as oil, uranium, minerals and metals such as copper, gold or lithium, and foods. China needs access to these resources to continue its economic reinvention and development. Each side can benefit, but there are concerns in such relationships, particularly for the less developed side. Foreign direct investment (FDI) into Africa has been easing in recent years as an uncertain international economy leads investors to prefer reduced risk (Ernst & Young 2017). Investment, unlike trade, locks the parties together over a period of time and the thing that locks them together is debt. The majority of FDI funds move from and to developed economies with established legal systems and economic governance. Africa is a continent with many economies, a few of which attract most of the FDI that comes to Africa. Egypt, South Africa, Morocco and Nigeria take the bulk of the FDI funds. Though there are large sums of FDI going to Africa, mostly from developed and established partners such as the United States and Europe, strongest growth is in FDI funds coming from China (Ernst & Young 2017),