The Trump administration has raised the alarm about China’s domination of large infrastructure projects in Africa, diagnosing the growing indebtedness of African nations to China as a threat to US national security, as well as the sovereignty of the countries affected. They also correctly bemoan the unfair advantages conferred on Chinese firms by Beijing’s multi-billion dollar financial commitments. China’s commercial interests in Africa have evolved from infrastructure-centric, government-to-government (G2G) financing to challenge areas of traditional US investment strengths, such as foreign direct investment, private equity, and venture capital. As a result, the administration needs to account for the true nature of the economic challenge to US interests that China’s changing engagement with Africa poses.
A new issue brief by Africa Center Senior Fellow Aubrey Hruby, “Deconstructing the Dragon: China’s Commercial Expansion in Africa,” captures the diversifying forms of Chinese capital flows to African markets. Hruby first describes the opaque G2G nature of Chinese financing and contrasts it with the traditional government-to-business structure of US development finance. She then analyzes US investment in African markets across capital flows and warns of rising competition from Chinese firms in each category. In light of this evolving landscape, Hruby asserts that the United States must build out its commercial strategy towards Africa, using new tools to maintain the upper hand in areas of comparative advantage and double down on key areas of market demand.