China-Africa Investment Cooperation

Facilitated by The Forum on China-Africa Cooperation (FOCAC) established in 2000, China-Africa economic and trade cooperation has yielded fruitful results, and the contribution of investment cooperation cannot go unnoticed. Chinese business investment in Africa meets the development needs of Africa and has produced mutually beneficial and win-win results, gradually becoming a primary driver in China-Africa economic, trade and investment cooperation. In this whole process, the investment of Chinese companies in Africa presents the following characteristics.  

First, China’s investment in Africa is steady and strong. It is estimated that by the end of 2020, the stock of Chinese business investment in Africa should not be less than $56bn. Over the past 20 years, the flow of China’s direct investment in Africa has been growing by more than 25% per annum. Despite the impact of COVID-19, China’s investment in Africa has increased from $2.71bn in 2019 to $2.96bn in 2020. Chinese companies are undergoing a transition from “going to Africa” through “settling in Africa”, to “establishing roots in Africa”. Concrete industrial cooperation has promoted Africa’s industrialization process and created ample job opportunities in Africa. A survey shows that half of Chinese firms have introduced new products or services to African local market and one-third have transferred new technologies.

Chinese companies investing in Egypt are represented by Jushi Group, China XD Electric, Angel Yeast, New Hope Group, Midea, Konka and other manufacturing companies. For example, Jushi Egypt for Fiberglass Industry S.A.E (Jushi Egypt), launched one of China’s largest investment projects in Egypt, filling the gap in fiberglass industry in Egypt and makes the country the world’s fifth largest fiberglass producer and exporter. The production base of Jushi Egypt was put into operation in August 2018, with an annual capacity of 200,000 tons. It represented a total investment of $580m and created 2,500 local jobs.  

Second, China and Africa are highly complementary in development strengths. Africa, with rich resource endowment and a huge demographic dividend, is seeing accelerating urbanization and burgeoning manufacture sector, while China enjoys strengths in capital, technology and development experiences. China-Africa cooperation has significantly boosted efficiency of resource allocation. Traditionally, Chinese companies have competitive edge in investing in labor-intensive manufacturing sectors and industrial park development. Chinese companies take industrial parks as an important investment area, and build upstream and downstream industrial chains underpinned by the local market supporting capacity and industrial development, thereby driving local industrialization. Since its establishment in 2008, China-Egypt TEDA Suez Economic and Trade Cooperation Zone (TEDA Zone) has gradually focused on four flagship sectors – new building materials, petroleum equipment, high and low voltage equipment, and machinery manufacturing, improving the industrialization level of relevant local industries.

In recent years, new areas such as high-end technology manufacturing and medical care have become new highlights of China-Egypt investment cooperation. In October 2019, Foton inaugurated a manufacturing cooperation project with Egypt, and delivered 50 electric buses to the government of Egypt. This is the first China-Egypt cooperation project in localized manufacturing of new energy buses, and largest order of electric buses to date in Egypt. This project will be a model for cooperation in automobile production, and bring a new industrial revolution to electric vehicle manufacturing technologies in Egypt. 

On July 18, 2021, Chinese State Councilor and Foreign Minister Wang Yi and Egyptian Foreign Minister Sameh Shoukry attended the ceremony marking the joint production of one million doses of COVID-19 vaccine.  As the first batch of Sinovac vaccines rolled off the production line, Egypt became the first African country to produce the COVID-19 vaccine in cooperation with China. “The cooperation between Egypt and China is a successful model for international cooperation and transfer of global expertise” hailed Naeema Al-Gasseer, WHO representative in Egypt.

Third, China’s investment cooperation with Africa is mutually beneficial. China is working to foster a new development paradigm, with domestic circulation as the mainstay and domestic and international circulations reinforcing each other. The investment of Chinese companies in Africa helps to smooth global industrial chains and facilitate export from both sides. Chinese companies, while achieving their own development, have been active in transferring technology, increasing local procurement and creating jobs, making remarkable contribution to social stability and economic prosperity in African countries. The Attractiveness Program Africa released by Ernst & Young shows that since 2005, the number of jobs created by Chinese companies in Africa is more than triple the US figure, and that China has become an important contributor to new jobs in African countries.

The writer is the Charge d’affairs of the Chinese embassy in Egypt