Wednesday, October 10, 2012

China-Africa: Resources for Infrastructure

Nathan William Meyer posted on 9 October 2012 at International Policy Digest a piece titled "China's Dangerous Game: Resource Investment and the Future of Africa." It discusses China's massive resources-for-infrastructure deals in Africa.

While the analysis makes a positive contribution to the subject, it is misleading in that it interchanges "resource-for infrastructure deals" with "investment". What is taking place here is not investment as in foreign direct investment. Most of these deals are concessionary loans offered by Chinese banks or institutions to resource rich African countries such as Angola and Ghana. These countries often use the loans for major infrastructure projects such as roads, bridges, dams, etc. built by Chinese companies, usually state-owned companies. The African country then pays down the loan by sending natural resources, usually oil or minerals, to China. This activity does not constitute Chinese investment in Africa. It is a commercial deal or, as the author sometimes says, resources-for-infrastructure deal.

Click here to read the analysis.

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