The debate on the consequences of Chinese investment in Africa for the EU, which took place on 24 June at the Bruegel Institute, highlighted a Chinese strategy and investment that is very different from that of Europeans. For Beijing, which has begun an exercise to review its economic model, Africa has the strengths to compensate for its weaknesses. It has also invested more than the EU in bridging the digital divide.
According to Solange Chatelard, a research associate at the ULB, Beijing is facing the crisis of Chinese success: what made it successful in the 1980s is now becoming its weakness. It continues to have excess capacity, but the volume of its labour force is shrinking due to the ageing of its population and its higher cost. Its structural balance is unstable, its energy and raw material resources are limited. It is therefore seeking to refocus its industrial policy to become a technological leader – the “China 2025” plan, which requires major reforms and the refocusing of its economy on domestic consumption. Changing its business model therefore means shifting its manufacturing basis to African countries that possess these assets, which are increasingly lacking, Ms Chatelard explained.
Africa still receives little foreign direct investments (FDI) compared to other emerging regions and despite its needs, said Alicia Garcia-Herrero, a Senior Fellow at Bruegel. China invests more than other regions of the world; however, the EU remains by far the largest investor in Africa, she also stressed.
Moreover, these investments do not generate any more jobs. However, the influence that Beijing has gained from these figures is remarkable, she added.
Chinese investments diverge from those of the EU, which remains well ahead in greenfield investment projects, while Chinese funds are concentrated in mergers and acquisitions, mainly in the energy sector. China's entirely new investment projects focus mainly on real estate, while its project financing focuses on the transport and energy sectors.
Several speakers also highlighted Beijing's key role in bridging the digital divide in Africa, a crucial sector in which the EU is conspicuous by its absence. (Original version in French by Hermine Donceel)