AFRICA OUTLOOK

by Royce Lowe

America and China in Africa, Foreign Direct Investment

Africa has a population of around 1.4 billion and a median age of around 20 years. It is a poor continent but rich in natural resources. It is lacking in infrastructure, but much less than it was since the arrival of numerous Chinese construction companies on the continent.

China’s forays into Africa began with Beijing’s support of liberation movements fighting colonial rule. Beginning in the late 1990s, China’s commercial engagement took off and was formalized in 2013 with the Belt and Road Initiative (BRI), a well-resourced effort to build political influence and grow commercial relationships throughout the developing world. The BRI’s major activities include lending for infrastructure development, engineered and constructed by Chinese companies, and resource extraction by Chinese mining and energy firms. While certain countries, including Ethiopia, Angola, and Zambia, have been a priority, China has grown its presence in most African countries. Over the decades since the Cold War, Chinese influence in Africa has increased significantly, while U.S. influence has flatlined.

China is Africa’s largest two-way trading partner, at $254 billion in 2021, some four times greater than U.S.-Africa trade. China is the largest provider of foreign direct investment (FDI) that supports hundreds of thousands of African jobs. This is roughly double the level of U.S. foreign direct investment. While Chinese lending to African countries has fallen of late, China remains by far the largest lender to African countries. It is to be expected that China’s commercial activity in Africa would increase with the dramatic rise of its economy to become the second largest in the world, especially given China’s need for raw materials to support its very large manufacturing base. But this growth also represents a determined Chinese governmentdriven effort to make significant inroads in Africa.

African leaders recall with concern the Cold War, when the United States and Soviet Union fought proxy wars in Africa, making them wary of great power rivalry. Some Africans view China as a positive development model. This favorable impression is actively cultivated by Chinese diplomacy throughout Africa. Sometimes U.S. interests will require pressuring Africans to choose, such as when the United States pressed African states to vote to condemn Russia’s brazen invasion of Ukraine at the United Nations (China abstained). But in general, U.S. diplomacy in Africa will be more effective when it’s not framed as an “us-or-them” proposition, especially versus China. Early in the Biden administration, Secretary of State Antony Blinken told allies that the United States would not expect them to choose between Washington and Beijing. This approach, however, has come under increasing pressure as relations between the two major powers have further deteriorated.