The author made an attempt to show the main directions and dynamics of the development of investment cooperation between China and the countries of the African continent.

Keywords: China, Africa, foreign direct investment (FDI), infrastructure, raw materials.

The lessons of the global financial crisis prompted experts to take a fresh look at China's economic strategy and its investment policy abroad in the new millennium, which is aimed both at providing the dynamically developing national economy with the necessary raw materials, and at gradually moving export production to regions with cheap factors of production, one of which (the most promising) is Africa.

The activities of the PRC in Africa are considered in a number of Russian publications (Borisov, 2005; Novoselova, 2005; Tomberg, 2011). This article attempts to show the main directions and dynamics of China's investment cooperation with the countries of the African continent, an important milestone of which was the China-Africa summit held in Beijing in 2006, which gave a new impetus to China's cooperation with African countries, pointing out the mutually beneficial nature of such cooperation, which also contributes to the growth of the level of socio-economic development countries of the continent.

In recent years, China has increasingly established itself on the international stage as a new investor and donor. In the early 2000s, China's economic strategy took a turn, with the slogan "go outside" being proclaimed. In 2012, China ranked third in the world in terms of foreign direct investment (FDI) exports after the United States and Japan, and the fourth was the Hong Kong Special Administrative Region of the People's Republic of China (Hong Kong) [World Investment Report..., 2013, p. 6].

China has an active presence in Africa. In terms of the volume of investments imported into it from China, Africa is inferior to other regions - Asia, Western Europe, and the United States. China recently launched economic cooperation with African countries, but its scale has already reached an unprecedented level. If you look at official statistics, you can see that by the 2000s, the trade turnover between China and African countries exceeded the $ 10 billion mark. At the 2006 China-Africa Forum in Beijing, Chinese President Hu Jintao outlined a new $ 100 billion trade target that China was expected to reach by 2010. However, China's trade with African countries reached $ 107 billion by 2008. During the global financial and economic crisis, the growth rate of trade turnover slowed down, but by 2010 this figure reached the level of $ 129 billion [China in Africa Analysis, 2011].

China's relations with Africa are generally successful because both sides are interested in them. African countries with large reserves of natural resources: non-ferrous metals, iron ore, oil need to finance infrastructure projects, and China, having capital, lacks the raw materials necessary for the sustainable development of the national economy. Cooperation between China and African countries is developing in such areas as investment, trade, healthcare, education, tourism, culture, introduction of advanced technologies, etc. Cooperation with the African continent allows private Chinese companies to increase their power and invest in new ambitious projects, creating or upgrading infrastructure in African countries, which in turn contributes to economic growth in the latter and, as a result, strengthens their partnership with China. It is important to note that by 2010, China had become Africa's largest trading partner, accounting for 10.4% of the continent's foreign trade turnover.

Already in the late 1950s and early 1960s, the PRC actively sought its diplomatic recognition based on the "one China" principles, which was necessary for it to later become a permanent member of the UN Security Council. The difficulty of the situation for Beijing was that Western countries did not want to recognize communist China, preferring Taiwan. The PRC has found support among socialist countries, as well as among African states that have recently been freed from colonialism. In exchange for investment and aid, African countries were willing to grant China diplomatic recognition and access to their natural resources, although not all African states were willing to cooperate with China. On the African continent, there are still four countries1 that have decided in favor of Taiwan and therefore are still unable to attract Chinese investment. The demand that foreign countries refuse to recognize Taiwan as an independent state remains an unshakable principle of Chinese foreign policy and a condition for China to maintain diplomatic relations with them.

It is interesting to look at the mechanism of China's interaction with Africa. The roots of this mechanism go back to the 1970s and 1980s, when Japan and the United States, at the peak of their economic development, actively invested excess capital in foreign countries with underdeveloped economies and cheap labor. Access to natural resources has been a major goal of the United States and Japan. For example, after several years of negotiations with China, Japan proposed the following model of cooperation: in exchange for China's natural resources, Japan provided technologies for their development, provided training for Chinese technical personnel, provided financing for projects on preferential terms, and provided employment for the local population. The United States worked on a similar principle, but also considered the possibility of remaining in the Chinese market, providing a different range of services. In many ways, this policy was conducted to strengthen the position of American TNCs in China.

China used these investments to hire Japanese companies to build transportation routes, coal mines, and power plants. By the end of 1978, the Chinese government had signed 74 contracts with Japanese companies to finance key projects that, in fact, were the basis for modernizing the Chinese economy. China later used similar methods on the African continent. In exchange for investment and aid, African countries gave China access to their raw materials, hired Chinese companies to modernize and build modern infrastructure, which was a prerequisite for contracts signed by Beijing with African states.

¹ Burkina Faso, Gambia, Swaziland, and Sao Tome and Principe; the PRC has no diplomatic relations with these countries to this day.

A number of researchers, such as R. I. Tomberg, tend to define the investment policy of the PRC as excessively focused on gaining access to raw materials of other countries, as "colonial" [Tomberg, 2011, p. 36, 75]. Such claims are not unfounded, although statistics indicate not only the "raw material appetite" of the Middle Kingdom, since China, penetrating Africa, is not limited to pumping natural resources from the continent, but builds hospitals, schools, housing and other social infrastructure there. In recent years, China has adopted the slogan " raw materials for infrastructure." In an effort to expand their positions in the commodity sectors, Asian countries are increasing their assistance programs to African countries and participating in projects that are vital for the economies of these countries. So, in Nigeria, China National Petroleum received 4 licenses for oil exploration and production in exchange for agreeing to invest $ 4 billion. in the restoration of an oil refinery, the construction of a hydroelectric power station and a railway [World Investment Report..., 2006, p. 43-44].

China proclaims the principle of non-interference in the internal affairs of other countries, does not make demands on them regarding democratization, human rights, etc.If Western investors boycotted Sudan before the secession of South Sudan because of human rights violations, then this vacuum in the capital market was filled by Chinese TNCs and TNCs from other Asian countries. What does China gain by "going" to Africa?

First, it gets long-term access to the necessary sources of raw materials, concentrated in the countries of the African continent. If we exclude 2013, which did not start very well for China, then over the past 20 years, the average GDP growth rate in China has been 9.5% per year. The rapid growth of industry and construction in China requires a significant resource base, which is available in African countries. The main trading partners of China in Africa in this area are Angola, South Africa, Sudan, Nigeria, Egypt and Zambia. These countries export oil, iron ore, natural gas, copper, pig iron, non-ferrous metals and diamonds to China.

Given that Africa is home to about a billion people in general, the continent is objectively becoming a key trading partner and a promising market for Chinese goods and services. It is known that China is the world's largest producer of competitive consumer goods. This is evidenced by statistics: since the 2000s, exports of products to African countries have increased by an average of 10% per year [Bloomberg.com, 2012].

In addition to investments in the raw materials sector carried out over the past 5 years mainly by the China Investment Corporation (CIC), which has been allocated $ 300 billion for this purpose, we should not forget about the investment opportunities of public and private Chinese companies, which in recent years have expanded their presence abroad. Chinese state-owned oil and gas companies and companies in other industries are active in this area. China State Corporation China National Offshore Oil invested $ 280 million in projects in Algeria, Nigeria, South Africa, and Sudan in 2005, which accounted for 7% of China's FDI inflows to Africa in 2005 [World Investment Report..., 2006, p. 42]. In 2008, Chinese construction companies earned about $ 20 billion on projects in Africa and signed contracts worth more than $ 39 billion (Brautigam, 2009). In addition to construction companies, there are companies in African countries that produce a wide range of products, provide medical services, etc. In many ways, the activities of these companies were supported by the new development institutions of the People's Republic of China, both state and commercial.

Of course, the diplomatic and political goals that China sets for itself can be added to the above. By establishing strong partnerships with African countries, China is gaining additional political weight in the world. African countries account for about a quarter of the total number of member countries

UN: China often relies on the political support of African countries when discussing important issues in the UN General Assembly. The favorable social and political effect of money injections in African countries proves the correctness of the choice of the vector of development of China's relations with the countries of the African continent.

Since cooperation between the two sides is usually mutually beneficial, it is worth noting the benefits for Africa from economic cooperation with China. Official data indicate that the African continent needs major infrastructure investments of $ 20 billion a year (African Development Bank, 2011). However, given the high level of risk in African countries, it is almost impossible or too expensive for African countries to find such volumes of financing in international capital markets. Today, China is able to meet this demand by investing in various sectors of the continent. For example, Chinese engineering companies build bridges, railways, highways, telecommunications hubs, power lines and other significant infrastructure facilities in African countries. The focus is on building schools, hospitals, and affordable housing. At the same time, of course, not all projects meet the standards of Western standards. Some Western experts accuse Chinese companies of non-transparency of transactions, high levels of corruption and security violations during the construction of facilities. So, for example, in 2005. More than 50 people have died due to the misuse of explosives at the Kambishi copper mine in Zambia. The Chinese metallurgical company CNMC, which already owned 85% of the mine, was accused of neglecting safety regulations. However, the Zambian government could not refuse Chinese investment in the Kambishi mine, which took more than $ 130 million to revive, not counting the cost of attracting specialists in this area, which at the same time increased the level of employment of the local population.

It is worth paying attention to the sectoral structure of Chinese foreign direct investment (FDI) in the countries of the African continent. The largest share of China's FDI in Africa in 2009 was in mining (30%), followed by industrial production (22%), construction (15%), loans issued to the financial sector (14%), commercial services (6%), retail trade (4%), research and development- Technical developments (3%), agriculture and fisheries (3%) [Ministry of Commerce of China, 2013].

Since 2000, after the First Ministerial Forum on China-Africa Cooperation, the PRC has revised its attitude to the debts of African countries and decided to write them off in the amount of $ 1.2 billion. And in 2009, then-Chinese Premier Wen Jiabao announced that China had written off $ 3.83 billion in debt owed to the poorest countries, much of it in Africa. Undoubtedly, such actions by China have been a great help for African countries.

Overall, China's FDI in Africa increased from $ 75 million in 2003 to $ 14.7 billion in 2012 (African Development Bank, 2011). The growth in FDI in the first six months of 2011 showed that Chinese investors were still very active on the continent. Overall, Chinese direct investment in sub-Saharan Africa totaled $ 44 billion at the end of 2011. The largest recipients in this region were Nigeria ($15.4 billion), South Africa ($6.2 billion) and the Democratic Republic of the Congo ($5.9 billion) [African Development Bank, 2011].

China's technical assistance has also provided significant benefits for the countries of the African continent: education of the population, professional development of workers, introduction of technologies, high-quality medical services to the population and allocation of grants for training African students in Chinese universities.

Financing of foreign investments of Chinese corporations is carried out with significant state support, which manifests itself in the form of concessional loans from development banks and major commercial banks. Central agencies such as the Ministry of Commerce of China (MOFCOM), the State Property Management Committee (SASAC), commercial and political banks, including the China Development Bank and the Export-Import Bank of China( China Export-Import Bank), and the Export Credit Insurance Corporation (China Export & Credit Insurance Corporation), actively participate in the investment expansion of the PRC. The importance of the above-mentioned state financial institutions in the foreign investment sector has significantly increased in the XXI century.

As China expanded its foreign economic openness and increased its export potential, in 1994 China established the Export-Import Bank (Eximbank), which is the government's agent for foreign economic transactions. First of all, Eximbank performs the functions of stimulating the export of Chinese products. The scope of responsibilities includes providing export and import loans for the production and purchase of mechanical engineering products. For example, in the period from 2006 to 2009. Eximbank has allocated more than $ 20 billion to finance Chinese exporters and private Chinese entrepreneurs in Africa. For comparison, we can cite the statistics of the World Bank, which provided $ 17 billion to African countries over the same period [World Bank Annual Reports, 2006-2009]. The Bank continued to play an active role in state support of China's exports after China's accession to the WTO, when the methods of government support for exports were severely restricted.

A special investment fund (China-Africa Development Fund) was established in May 2007 to finance direct investment in African countries. Gao Jian, Chairman of the foundation, said in an interview that the fund's funds will be used for joint projects between Chinese and African companies (both public and private) [Brautigam, 2009, p. 94]. Many African countries that have experienced apartheid and refugee problems are now focusing on economic development. The fund's charter provides for financing projects worth from $ 5 million to $ 50 million, and all types of projects are considered - from short-term to long-term.

It is worth noting the role of the Ministry of Foreign Affairs and the work of Chinese embassies in African countries. Along with the investment expansion of China, the labor migration of the Chinese population to Africa is also taking place. Embassies and consular departments assist Chinese workers in obtaining visas and resolving conflicts with local authorities.

Taking into account the above, it is necessary to point out the negative aspects in the interaction between the parties. Foreign researchers (mostly from Western countries) believe that the African market is too open for Chinese investment, goods, services and labor. To avoid many economic problems, African countries should reconsider their interaction with China. A huge amount of "cheap" money from China and loans on favorable terms is a good thing, but will this not cause another debt crisis in Africa? After all, as you know, Africa recently got rid of its debt burden to the countries that are members of the Paris Club. Even with loan benefits, you still need to service loans, and if revenue declines for various reasons, it is likely that this could lead to a default and a downgrade of the investment rating of African countries, which will significantly complicate their presence in the global financial market.

Cheap Chinese products represent another challenge for Africa. African producers cannot compete with Chinese ones, as the latter have more efficient production, which leads to displacement from the market

local producers. The best price-performance ratio of a Chinese manufacturer makes African and Western products uncompetitive. We can also highlight the flow of labor from China to Africa. Chinese specialists in various fields are more qualified than African ones. This also applies to the unskilled labor force, where Africans are inferior to the Chinese in terms of efficiency and motivation in general.

The new economic doctrine proclaimed by the Chinese leadership, the essence of which boils down to a gradual transition from an export-oriented development model to stimulating growth through domestic consumption, does not cancel, but, on the contrary, strengthens the role of China's policy of penetration into commodity-rich countries and regions where the African continent will continue to play a priority role. However, it should be emphasized that in the long-term economic strategy of the PRC, Africa is considered not only as a source of providing the national economy with the most important raw materials, but also as a promising platform for transferring export-oriented manufacturing industries there. Even today, the cost of labor in the south and southeast of China has increased significantly, which gradually deprives China of the advantage of cheap labor-a factor of production that has all along played a leading role in the penetration of Chinese exports to the world market. Today, production is gradually moving away from China to Vietnam and Bangladesh, where the cost of labor is significantly lower than in China. However, so far mainly foreign capital flows there, which was previously invested in China and formed the backbone of the export sector of the national economy there.

Thus, Africa should eventually play (and is already partially playing) The same role for China that South Korea, Southeast Asian countries, India, and China have alternately played for Western capital, providing export-oriented production created by foreign capital and cheap local labor.

list of literature

Borisov D. B. Direct foreign investments in the economy of developing countries in Asia and Africa, Moscow, 2005.

Novoselova L. V. China, investment strategy and prospects for Russia. M, 2005.

Tombsrg R. I. Kitay v global'noy konkurentsii za neftya Afrika [China in Global Competition for Oil in Africa]. Moscow: IMEMO RAS, 2011.

African Development Bank, China's Trade and FDI in Africa. May 2011. http://www.afdb.org/.Bloomberg.com. (Database) (10.12.2012).

Brautigam D. The Dragon's Gift: The Real Story of China in Africa. Washington, 2009.

China in Africa Analysis. Report of the Investment Company "Renaissance Capital", 2011.

Ministry of Commerce of China (MOFCOM). http://cnglish.mofcom.gov.cn/ (10.02.2013).

World Bank Annual Reports (2005-2008). World Bank; Washington, 2006-2009.

World Investment Report 2006. UN. N.Y.; Geneva, 2006.

World Investment Report 2013. UN. N.Y.; Geneva, 2013.

Permanent link to this publication: