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Working Paper 126 - China’s Trade and FDI in Africa

23-Jun-2011

China’s growth and its capacity to move in thirty years from under-development and extreme poverty to an emerging global power and one of the largest exporter of manufactured goods has attracted the attention of many developing countries. China has served as a development model for Africa and an alternative source of trade and finance from Africa’s traditional development partners. The impact of China on African economies has been diverse, depending in part on the sectoral composition of each country’s production. Overall, China’s increased engagement with Africa could generate important gains for African economies. However, analysis is required to quantify the advantages and disadvantages, and to design the policies necessary to maximize the development impact of China. One overriding consideration is that reaping the full benefits from Chinese trade and investment will require substantial improvements in governance in African economies.

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