Why is China in Africa?

Abstract

This paper analyzes China's official financial flows to Africa by assessing 4 policies that could drive the financial flows. The paper finds that the Going Global Strategy is the primary determinant of official financial flows to Africa for the current phase of ChinaAfrica relations. The strategy is a state-led effort by China to mould promising Chinese companies into multi -national companies. Africa is an unsaturated market with potential for Chinese companies to gain market share not available elsewhere. This is achieved by offering financing to Africa in the form of export buyer's credits, which are used to purchase goods and services from Chinese companies. The risks of expanding overseas for Chinese companies are mitigated, and this is crucial in helping them become multinational companies. As a result, Chinese exports to Africa are increased significantly.