africa

Yale Center for the Study of Globalization
18.3.5 Chinese finance
The rate of increase of Chinese finance is likely to continue to slow and concessional
finance is not likely to expand as fast as before. Between 2008 and 2011, for
example, China’s budget for foreign assistance expenditures grew by an average
of 9 percent annually after several years of expansion at an average rate of 17 percent.
Similarly, as the “going global” policies took off between 2005 and 2007, China
Eximbank’s global disbursements of finance 14 grew at an average of 40 percent
annually. However, in 2008-12, growth slowed to an annual average of 9 percent,
and in the last year (2011/12), growth was only 3 percent.
It is also possible that projects in Africa may experience a rapid increase in the near
term as a backlog of project agreements are executed before the 2015 FOCAC
deadline. The hydropower sector provides an illustration. Between 2003 and 2012,
Chinese banks financed only eleven large (greater than 50 MW) hydropower projects
and assorted transmission lines in Africa, for a total of US$4.5 billion. In 2013
alone, however, China Eximbank appears to have signed six loan agreements for
hydropower projects, totaling US$2.96 billion, with others under active discussion in
2014. China Development Bank’s growing commercial role in Africa may also offset
a slowing of cheaper finance from China Eximbank. Chinese policymakers believe
that many African countries can manage finance at commercial rates.
18.4.5 Manufacturing
According to the Chinese Ministry of Commerce, the stock of Chinese investment
in African manufacturing came to US$3.43 billion as of 2012. Drawing on data from
the Chinese Ministry of Commerce, researchers at the SAIS China Africa Research
Initiative have identified 505 Chinese manufacturing investments in Africa approved
between 2000 and March 2014. As manufacturing costs rise in China, more Chinese
and other firms will be looking to move offshore. An official at China’s Ministry of
Commerce commented in 2013: “In the past, China imported minerals and crude
oil directly from Africa—but now we are investing more in downstream mineral
processing businesses there.” 15
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