CHINESE FOREIGN DIRECT INVESTMENT AND OFFICIAL FINANCING IN SUB-SAHARAN AFRICA

Abstract

Chinese foreign investment and official financing significantly increased following the announcement of the zouchuqu, or “go global” policy, in 1999. China’s emergence as an international investor, lender, and benefactor—especially in the developing world—has led to concerns that its activities threaten the existing international order. This thesis seeks to determine the factors that drove Chinese foreign direct investment (FDI) and official financing in Sub-Saharan Africa by examining the region as a whole, as well as individual case studies of Angola and Senegal. Overall, the research concludes that China’s activity in Sub-Saharan Africa was primarily driven by a desire to expand economic opportunities for Chinese firms. Across the region, Chinese funds went toward expanding export markets to ease Chinese excess capacity concerns and securing new sources of natural resources. A limited portion of Chinese FDI and official financing was driven by foreign policy goals, most notably persuading six African countries to switch diplomatic ties from Taipei to Beijing. The Angola case study demonstrates that African countries that offered substantial economic opportunity for Chinese firms attracted significant levels of Chinese investment and financing. The Senegal case study shows how African countries with limited economic prospects for Chinese firms received relatively little of either, even if they offered China a potential foreign policy win.