The New York Times ran a story last week touting the steady decline of Chinese investment across the African continent:
As global commodity prices have plummeted and several of China's African partners have stumbled deeper into chaos, China has backed away from some of its riskiest and most aggressive plans, looking for the same guarantees that Western companies have long sought for their investments: economic and political stability.
Though I've touched on this issue before, it appears that it is one worth returning to. While the economic crisis has, indeed, adversely affected Chinese exports and subsequently many key African sectors, this does not spell doom for the continent anymore than it signals a mass withdrawal of Chinese investments, as the NYTimes appears to suggest.
The most recent issue of Africa-Asia Confidential does an especially brilliant job of driving this point home:
Anecdotal evidence suggests that some firms could be trying to shift unwanted goods to new markets in Africa. That might mean more choice and lower prices for African consumers. 'We don't see so many African traders coming in as before but demand for Chinese corporations is extraordinary. We see so many Chinese merchants and small companies sending people to Africa, many for the first time,' said Lily Tang, China Manager for Kenya Airways, which flies from Guangzhou to the continent.
Indeed, while some Chinese companies might be fleeing, the general trend is seemingly one of firm restructuring. China is continuing to invest in natural resource sectors across the continent, with projects picking up now that the weather is improving. Small-scale entrepreneurs are likewise continuing to pursue independent ventures in states across the region, peddling cheap goods in African markets. Though we may be witnessing a slowdown in such trends, it is hardly the end of 'China in Africa,' as such.
An additional point worth mentioning, one initially observed by Africa Works, is that the NYTimes story is based solely on the country of Guinea:
a country that has little going for it economically or socially. In more robust countries such as Kenya, Ghana and Zambia, Chinese investment is part of a mix of foreign capital. With growing cities, many African countries represent a rare opportunity to take advantage of new consumer demand.
It will, of course, be curious to observe how things unfold as the economic crisis progresses, but for the time being there really is no need for dramatic tales of complete Chinese withdrawal. Really.
[Photo credit: NYTimes]