China has clearly signaled to Europe that it does not shy away from involvement in Africa, historically Europe’s area of influence. But the nature of China’s direct investment flows to the continent will have to change if they are to prove sustainable.
Senegal's President Macky Sall presents China's President Xi Jinping a ceremonial key during the inauguration of the national wrestling arena on July 22, 2018, in Dakar. China's President Xi Jinping inked a clutch of trade accords on July 21, 2018 on the first visit by a Chinese leader to Senegal in almost a decade.
Thus, it is fair to say that China is catching up in accumulating outward FDI into Africa to a level which is commensurate with its economic size and long-term political ties with the African region. Narrowing the issue down to the speed of such convergence, the data surprisingly shows that China is not yet the largest investor even in terms of FDI flows. China’s dominance has been more obvious as an acquirer of assets , while EU and U.S.
Africa is the fastest-growing region population-wise, but China’s FDI into Africa is creating fewer jobs per unit of investment, on average. For such inward FDI to be welcome, and thus sustainable, its nature will need to change so as to create more jobs. In other words, for China to be successful in its investment strategy in Africa, it will need to move from focusing its investment in natural resources and infrastructure to manufacturing, which is more labour-intensive.
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