Tuesday
January 15
2019

Viewpoint: The Future Is in Africa, and China Knows It

By Noah Smith

During the past decade, China has been investing a lot of money in sub-Saharan Africa.

Some Western observers worry that this represents a new form of colonialism. Given the continent’s history with European conquerors and rich countries trying to cheaply exploit its natural resources, that suspicion is understandable. But although China can sometimes be predatory — for example, when uneconomical projects saddle African companies or governments with unpayable debt — the new African investment bears little resemblance to the colonialism of old.

Colonialism, and the pseudo-colonial exploitation that sometimes followed independence, was mostly about extracting natural resources (and sometimes slave labor). Although securing access to natural resources is surely one of China’s goals, its investments in Africa go beyond extractive industries. The sectors receiving the most Chinese money have been business services, wholesale and retail, import and export, construction, transportation, storage and postal services, with mineral products coming in fifth. In Ethiopia, China is pouring money into garment manufacturing — the traditional first step on the road to industrialization.

Photo courtesy of AMISOM Public Information.

Source: Bloomberg (link opens in a new window)

Tags
development finance, emerging economies, emerging markets, global development, LMICs