This Emerging Issues report examines a number of popular narratives about the impacts of Chinese investment on economic development in Africa. Popular narratives include Chinese infrastructure investments that have weak links to growth, Chinese investment leads to limited job creation in host countries, and Chinese development projects lead to environmental degradation (Bradsher, 2019).
Key Findings:
- China is not a member of the Organization for Economic Cooperation and Development’s (OECD’s) Development Assistance Committee (DAC). Its development financial flows to Africa do not align with OECD DAC’s definition of official development assistance (ODA) as official financing whose main objective is economic development and welfare in developing countries, with a grant element of at least 25%.
- It is important to disaggregate China. Chinese investments are not monolithic but are made by a range of actors with different operating modalities and varying links to the Chinese government.
- China is Africa’s largest construction financier and Chinese companies also win a large share of World Bank-financed infrastructure projects.
- Anecdotal evidence of the impact of Chinese investments is largely negative. However, the limited number of rigorous studies consulted for this review suggests a more nuanced picture.
- Chinese investment supports national economic growth and is servicing Africa’s widely acknowledged infrastructure gap.
- Chinese investment has a mixed impact on local economic development. While some evidence suggests that Chinese investment increases infrastructure access at the local level, there is a consensus that Chinese investment has weak backward linkages and can act as “enclaves,” unintegrated with the host country’s economy.
- Chinese investment does lead to job creation. There is consensus across the reviewed literature that Chinese investments and Chinese-owned companies lead to job creation.
- Chinese-owned mines potentially have worse labour practices than their non-Chinese competitors. There is a relatively large body of evidence, particularly from Zambia, but also from Zimbabwe, outlining poor labour practices in the mines.
- Chinese development investments in hydropower, infrastructure construction and extractives have resulted in instances of environmental degradation. There are examples of inadequate environmental impact assessments, water and soil pollution and illegal activities.
- Mounting criticism of the environmental impacts of Chinese investments in Africa has resulted in the Chinese Government and Chinese policy banks issuing new voluntary guidelines to improve standards.
- Across the literature, a common theme is the role of African government agency in Chinese investments. Studies of forest loss cover in Tanzania and mines in Zambia suggest that host government agency can condition whether outcomes of Chinese investment are negative or positive.
- Chinese constructed infrastructure is widely believed to be low quality, however, only two studies testing this assertion were found during the course of this review.
- Chinese investments in transportation and energy infrastructure are likely to be productive investments but it is too early to say definitively that this is the case.
