Africa, and China’s One Belt, One Road initiative: Why now and what next?

2017-05-09, by Lauren A. Johnston, from International Centre for Trade and Sustainable Development (ICTSD)

China’s growing outbound investment ambitions could be as transformative for today’s poor countries as inbound investment was for China. This will depend upon how recipient developing economies, in particular in Africa, utilise China’s investor interest for their own sustainable development.

Executive Summary:

This piece elaborates the economic logic and emerging development finance alternatives that loosely fall under a related umbrella framework, the One Belt, One Road (OBOR) initiative. The focus here is OBOR’s link to Africa, the world’s least-economically-developed region and home to abundant untapped human and natural resource wealth. 

It has provided an overview of the broad economic complementarity logic that underpins China’s OBOR in Africa: that of a large per-capita-resources-scarce developing economy with an old population and that of a large resource-rich developing continent with a mostly young population; between a country with excessive savings and infrastructure capacity, and a continent which in aggregate relatively lacks both. The OBOR initiative represents an agenda that broadly seeks to take “win-win” advantage of that complementarity.

For China, successful outsourcing of labour-intensive manufacturing will help to generate concurrent demand for some of China’s now excess industrial capacity. And for Africa’s part, the scale of Africa’s need for infrastructure and innovative funding for it – and China’s capacity and willingness to deliver it.

Lauren A. Johnston, Postdoctoral Fellow, Melbourne Institute of Applied Economic and Social Research, Faculty of Business and Economics, University of Melbourne.

This article is published under Bridges Africa, Volume 5 - Number 7 and has been granted authorization to use by International Centre for Trade and Sustainable Development (ICTSD).

Executive summary is based on the article. Copyright © International Centre for Trade and Sustainable Development (ICTSD). All rights reserved.