The 9th Ministerial Conference of the Forum on China-Africa Cooperation (FOCAC), held in Beijing in September, was attended by 51 African leaders representing the majority of the continent’s 54 sovereign states and two other African countries. He was present with all the powers of the country.
Therefore, in any case, China is expected to export capital to the world in the range of US$1 trillion to US$1.2 trillion over three years to balance the payments. Compared to that cascade, the US$51 billion for Africa (about 0.25% of the projected total) is fairly insignificant.
Africa’s gross domestic product (GDP) is approximately $2.8 trillion. As a comparison, the Development Assistance Committee (DAC), an international forum of 32 countries convened under the Organization for Economic Co-operation and Development (OECD), announced that in 2022 alone, USD 53 billion in aid, excluding investments and finance, will be allocated to Africa. provided to. Commercial financing.2
Africa’s largest project in the database is the $20 billion real estate developer China Fortune Land Development Co. announced in 2016 to invest in Egypt’s new administrative capital. The project never got off the ground and was canceled in 2018 due to disagreements over terms. 3
In the real estate sector, the fourth-largest project in the dataset was a US$6.4 billion project proposed by Shanghai-based Zendai Group in 2014 for a 16,000-acre project in the South African mining town of Maudderfontein on the outskirts of Johannesburg. This is a development plan. However, Zendai was unable to agree with local planning authorities on how to proceed with the development and sold the project before it could begin. 4
Among the top 10 FDI projects announced by value, CITIC’s proposed real estate development in Quiramba-Kiasi, Angola, is an example where actual Chinese spending was not in the form of FDI. The project did take place, with mixed results, and was financed by oil-backed loans. The risks of this project appear to be borne almost entirely by Angola, making it more like an Angolan construction project made possible by Chinese financing than FDI.5 A key element of the FDI concept is giving investors ownership of the investment. Foreign assets or companies established by investors.
These three examples illustrate how Chinese FDI can be overvalued. This is because it is canceled immediately after it is announced. Or because it is actually a loan rather than an FDI, causing an increase in debt to the investee country, China.
Other projects in the top 10 by value represent a combination of announced investment size and actual commitments by year. This includes the state-owned China Energy Engineering Corporation’s US$6.75 billion green ammonia plant in Egypt. Battery manufacturer Gothion plans to build a US$6.4 billion electric vehicle battery factory in Morocco. and China National Coal Corporation’s US$2.3 billion green ammonia project in Morocco, both announced in 2023.
China’s top 10 overseas greenfield investments in Africa have been announced, totaling approximately $53 billion. We estimate that less than US$10 billion of this was actually realized in a form that could be classified as FDI in objective economic terms. Chinese investment, aid, and financing are important factors in Africa’s economic development, but perhaps not as transformative as some announcements suggest.
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