Thursday, March 8, 2018

China's Investment in Africa: Problems with Numbers

Asia Times published on 7 March 2018 an article titled "How Accurate is Investment Reporting on China in Africa" by Doug Tsuruoka.

The article cites a recent analysis by the Financial Times that reports China invested $36 billion in Africa in 2016. It then provides China's official FDI flows to Africa in 2016 at just over $2 billion.

Neither of these figures represents the real number, which is not known with any certainty. The $36 billion cited by the Financial Times is much too high for the flow of Chinese FDI to Africa in 2016 for the reasons stated in the Asia Times article. At the same time, the official Chinese figure is too low because it only captures FDI reported to China's Ministry of Commerce. It does not include smaller investments and fails to capture Chinese FDI that passes through Hong Kong, the Cayman Islands, the British Virgin Islands, and other tax havens. Take all of these numbers with a grain of salt.

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