CCPIT Report Shows that China's Investment in Africa Does not Aim at "Loot Resources"

Source: China.org.cn    2013/10/21China

Council for the Promotion of International Trade (CCPIT) released a Report on the Survey Concerning Outbound Investment by Chinese Businesses in 2013 inBeijing on October 14, which shows that state owned enterprises (SOEs) are the main player of Chinese outbound investment and that Chinese businesses are also showing more interest in the markets of North America and the EU region. Moreover, the Chinese investment in Africa is mostly concentrated in the manufacturing sector rather than solely on the mining filed as portrayed by some that “Chinais looting African resources.

SOEs become the main player of outbound Chinese investment

The report shows that 45% of the SOEs on which the survey has been conducted have invested overseas, and the proportion for private businesses is 29%. In terms of the scale of outbound investment, by the end of 2012, over 50% of private businesses had an investment of US$100,000 to US$5 million, while that of most SOEs was between US$1 million to US$50 million.

There are over 70 private businesses whose outbound investment ranges between US$5 million to US$100 million, making up 27% of the total number, while the figure for SOEs is 28, making up 43.75% of the total. Around 13 private enterprises have an outbound investment of over US$100 million, making up 5% of the total number, and that of SOEs is 7, making up 11%. Among the businesses surveyed only one has an outbound investment of over US$2.5 billion, which is a SOE. All these figures show that the total investment of SOEs is bigger than that of private ones both in terms of the absolute figure and the average volume.

Chinese businesses are showing more interest in the markets of North America and the EU region

In terms of the investment destination, 333 businesses have invested in altogether 77 countries and regions, among which the EU and US take a big proportion, attracting nearly 31% of the businesses, and that for Hong Kong, Japan, Australia, India, Vietnam, Singapore, Canada and Indonesia is 7%, 4%, 4%, 3%, 3%, 3%, 3% and 2% respectively. The other countries as a whole attract 40% of the businesses.

As for geographical distribution, Chinese businesses mainly choose to invest in East Asia and Southeast Asia (29%), North America (18%) and the EU region (15%). Compared with the figure from the survey of 2009, Chinese outbound investment destination is becoming more diversified, and the EU and North America are more popular to Chinese businesses than before.

Chinais not “looting African resources”

In terms of the sectors Chinese businesses choose to invest in various regions, they mainly invest in the mining sector in Latin America, Oceania, Central Asia and West Asia, while manufacturing and trade take the main part of their investment in other regions including North America, the EU, South Asia, Central Asia and West Asia.

In East Asia and Southeast Asia, their investment in manufacturing and trade is far ahead of other sectors, which might be related to the fast progress of China-ASEAN FTA and transferring of Chinese low-end manufacturing industry to Southeast Asia caused by its domestic industrial transformation and rising business cost.

In North America, the EU and South Asia, the proportion of investment in manufacturing and trade is also higher than that of other sectors. Investment in scientific research and technological services in the EU region is over 10%, ranking the highest in the field among all the regions.

Although a lot of media are hyping that China is looting African resources. The survey shows that in spite of the fact that mining is an important sector of Chinese investment in Africa, it is the investment in manufacturing that takes the highest proportion in Africa. For example, among the investment to Sub-Sahara Africa, that for manufacturing is over 30%, nearly two times that for the mining sector. In their investment in the Middle East and North Africa, manufacturing also overtakes mining. In North Africa and Sub-Sahara Africa, Chinese investment in the mining field is less than 20% of their total investment. All this proves that the saying that China’s investment in Africa aims at looting resources is groundless.