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Mid-Term MNEs

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Đặng Dương
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9 views3 pages

Mid-Term MNEs

Uploaded by

Đặng Dương
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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TRƯỜNG ĐẠI HỌC KINH TẾ QUỐC DÂN

VIỆN ĐÀO TẠO TIÊN TIẾN, CHẤT LƯỢNG CAO VÀ POHE

BÀI TẬP CÁ NHÂN

HỌC PHẦN: CHÍNH SÁCH QUẢN LÝ CÔNG TY ĐA QUỐC


GIA

Đề tài: Case study: Chinese investment in Africa–natural resource


seekers motivation

Họ và tên: Đặng Quý Dương


Mã sinh viên: 11211536
Chuyên ngành: Kinh tế quốc tế
Lớp: Kinh tế quốc tế CLC 63A
Giảng viên: TS. Nguyễn Bích Ngọc

Hà Nội, Tháng 9 - 2024


China’s presence in Africa has been more and more obvious. Much of the continent is now
economically and politically aligned with the world’s fastest emerging superpower–China. The
simple answer for this is because China has pumped huge amounts of money into Africa.

But why does it do so? China is running out of growth potential as it shifts from industrializing to
industrialized. Meanwhile Africa is one of the least developed areas in the world. Nearly every
country has some level of natural resources that can be used to kickstart growth, and Africa has
plenty of them. However, African countries do not have enough resources to build the
infrastructure to gather these natural resources, and that is when China came in. By investing in
African mining and farming, China can profit off Africa’s growth and fuel the domestic
businesses that require minerals and food.
In addition to being a source of natural resources, Africa brings another advantage–labor.
Although China is the center of low cost manufacturing, the economic development its
manufacturing sector brought has pushed a large segment of population to the middle class and
raised the labor cost country-wide. This increases the Chinese workforce’s skill, but for the
lowest cost, lowest skill manufacturing, China is no longer competitive. This results in Chinese
firms setting up their production line in Africa, one of the cheapest and lowest skilled labor
markets in the world.

On Africa's side, Chinese investment, loans and aid are such attractive deals. Large African
infrastructure projects would be considered as risky by any traditional bank and would therefore
struggle to get financed. However, China’s Import–Export Bank does not care. Though
sometimes criticized for lack of transparency, Chinese aid programs have provided African
countries with grants and loans to make improvements in agriculture, education, healthcare, and
especially infrastructure, addressing Africa’s most pressing challenge: connectivity within the
continent. Chinese demand for oil, minerals, and agricultural products also contributes to
expanding trade, job creation, and economic growth. Despite causing environmental
degradation and resource depletion, Chinese investments seem to be more positive than
negative in terms of their results in the continent.
On China’s side, things may get more complicated. Over the last 20 years, China has become
Africa’s largest bilateral trading partner, and at the same time, the largest bilateral creditor. With
the enormous amount of platinum, cobalt, gold, uranium and coltan that Africa currently holds,
China has found itself a gold mine of the world’s most valuable minerals. Apart from exploiting
African labor and natural resources, China also gains political power through their bond with
African countries. It has been found that if an African country voted against Taiwan at the UN
General Assembly (along with China), they receive a little more Chinese infrastructure projects
than those who did not, and now Eswatini is the only African country that recognises the island.
Though in 2015, China gave out just $12 billion loans and invested a mere $3 billion in Africa,
their influence shows no reduction, as the Chinese government no longer has to force this
phenomenon, and now, private Chinese industry is taking hold of the continent.

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