China"S Investment to Africa

ABSTRACT
The first issue to be addressed is the type of investment occurring in the African nations (that is, the mode of entry for Chinese investment into Africa), and what types of investment are in the best interests of both Chinese business and African development. This point includes the infrastructure and development that the Chinese should implement in Africa in exchange for their natural resources. Following this is the question of working conditions and the proportions of job creation for both African and Chinese workers, ensuring that African workers gain a reasonable portion of the jobs distributed and that they are able to work under safe conditions. The last topic to be addressed is what African nations must do in order to be able to sustain and maintain the positive economic effects of the investments in the long-term after China’s eventual exit, helping to shape an independent and progressive African continent.  

TYPES OF INVESTMENTS
In the past, most foreign companies have been denied access to the African domestic capital markets due to the long history of exploitation from outside powers in Africa (Brautigam, 2007). Nowadays, however, foreign direct investment (FDI) has become a major source of capital in the region as a result of the significant efforts carried out by African governments (Velde, 2004).

In 2006, Chinese trade in Africa reached around fifty billion dollars, boosting growth rates on the continent and spurring much-needed infrastructure improvements (Brautigam, 2007). According to the Chinese Ministry of Commerce (2008), China's FDI in Africa amounted to 873 million dollars in the first three quarters of 2009, an increase of more than seventy-eight percent compared to the previous year (People's Daily, 2009).

Greenfield strategy is a special form of FDI that entails local purchases and property ownership. Some African countries have now begun to use this strategy to favour domestic infrastructure development, by having... [continues]

Read full essay