globalEDGE Blog: China's Rise in Africa

China's Rise in Africa

Africa is a land with vast natural resources, but they come at a high price. Africa is known for having some of the most unstable countries in the world. Even with these dangers, China has broadened its exposure in the region to secure the natural resources needed by the factories and businesses of the world’s fastest growing economy.

This past year, China became Africa’s largest trading partner. Between the two of them, trade rose from $129.6 billion in 2010 to $160 billion in 2011. In addition, investments by Chinese companies expanded to $40 billion. Of that amount, $14.7 billion was direct investments. One worry the United States has expressed on China’s recent expansion in Africa, is the fact that China is not as financial transparent as the rest of the developed world in Africa. Transparency is crucial to combat corruption and impose stricter environmental and labor standards to move Africa to more globally accepted norms. “Our argument is that China can play a constructive role in Africa as investors – but they need to be responsible investors,” said Mr. Hormats who is the Secretary for Economic Affairs in the US State Departments.

If China continues to expand into Africa, they will have to be cautious of the stability of the region and also the dangers of terrorist activity. Most recently, employees from a Chinese operated company in Africa were kidnapped and held for ransom. Investing in China comes with risk, but where there is risk, there could be much reward.

blog comments powered by Disqus

Glossary