Sino-Africa economic and Chinese foreign direct investment in Africa on bilateral trade relations

Abstract

The purpose of this paper is to investigate the impact of Sino-Africa economic and Chinese FDI on Africa trade relations. China’s phenomenal economic growth rate has made the country rise to world leadership status, causing many analysts to ponder over its regional and international intentions and goals. Its investment is paying off now mainly in oil and other raw materials imports and manufactured goods. We used a panel data to analyze Chinese FDI exports to Africa, and a time series data to investigate the effect of its imports from Africa. The study shows that Chinese FDI in Africa has contributed significantly to increase Chinese exports to Africa as well as imports from Africa. It means that Chinese DI in Africa is an important factor for explaining the growth of the bilateral trade. The research found also that per capita income and annual percentage growth of domestic product of China have a positive effect on its import. China might experience significant backlash from other world powers due to its involvement in African affairs. This paper aims to highlight the tight rope which Africa and China have to balance in their new found relationship to keep it on a win-win situation. Key words: Economic development, Sino-Africa, trade, FDI, growth.