China’s investment into Africa appears to be another casualty of the slowdown in the world’s second-largest economy. Chinese cross-border investment in greenfield projects and in expansion of existing projects in Africa fell by 84 per cent in the first half of this year compared with a year earlier, from $3.54bn to $568m.
With less money being spent on the big projects that dominated investment in the first half of 2014, Chinese investment has refocused on its original interest in the continent: raw materials.
Even as its total investments fell back sharply in the first half of 2015, investment into extractive industries nearly doubled. Chinese spending on projects in oil, gas, coal, mining and metals rose from $141.4m to $288.9m over the period.
Seen in the context of the past decade, this year’s level of Chinese FDI is more a return to form than a reversal of a rising trend. It peaked at $11.7bn in 2008, before the global financial crisis, only to fall back to an average of $1.5bn a year over the following five years. Last year’s fresh surge in investment has not been maintained.
China’s relationship with African states has been a pivotal — and often controversial — component of the region’s growth story over the past decade.
Africa attracted record inward FDI flows in the full year of 2014 totalling $87bn — a 64 per cent increase from 2013 according to research by This is Africa and fDi Intelligence, two publications owned by the Financial Times.
The figures from fDi Markets, an FT data service, include greenfields and expansion of existing projects but exclude other items such as intra-company loans typically included in traditional, balance of payments FDI data.
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