São Paulo – Chinese foreign direct investment into Africa has grown significantly over the last five years and totalled US$ 9.8 billion from 2003 to 2009, according to a survey disclosed this Wednesday (6th) by the Institute of Applied Economic Research (Ipea). The figures show that investment takes place primarily in six Africa countries, among them Algeria and Sudan.
Half of the capital invested into the region during the period, however, went to South Africa. In the list of Chinese investment targets in the continent, from highest to lowest, South Africa is followed by Nigeria, Algeria, Zambia, Congo and Sudan. "Generally speaking, Chinese enterprises investing in the African continent have targeted the oil, mining and infrastructure sectors," according to the survey.
Total foreign direct investment by China reached US$ 275 billion between 2003 and 2009, mostly in Asia itself, which accounted for 76% of the total. Latin America was the second leading target, at 12.4%, but 94% of the funds were allocated to tax havens. Africa, the third leading target, received 4%, followed by Europe, at 3.5%.
According to the Ipea survey, tax havens aside, investment in Latin America went to Venezuela, Brazil, Argentina, Peru, Guyana, Cuba and Mexico, totalling US$ 866 million.
"In the region, the main purpose of China has been to gain access to the extraction and production of natural resources and energy (oil, copper and iron) to meet its domestic demand, but it has also investing in assembly of manufactured goods, telecommunications and textiles," according to the Ipea survey.
The Ipea points out that the Chinese foreign direct investment process has been mostly run by the state. The institute claims that starting in 2002, the Chinese government created several incentives to promote the internationalization of its enterprises, including financing and ease in administrative processes. "The government has not acted solely to microeconomic or trade-related motivations," according to the survey.
Chinese investment overseas is mostly concentrated in the services and primary sectors, and in regions with abundant natural resources or important financial centres. China started its opening process in 1979, and investment developed to reach US$ 830 million in 1990. The total then rose to US$ 52.1 billion in 2008 and then dropped to US$ 48 billion in 2009 due to the global crisis.
The Chinese company that invests the most is Citic, an investment company that is largely services-oriented. The second leading company is the Cosco conglomerate, which specializes in maritime transport and related areas, the third is the China State Construction Engineering Corporation and the fourth is the China National Petroleum Corporation.
*Translated by Gabriel Pomerancblum
