Corruption, Chinese Investment, and Trade: Evidence from Africa

Abstract

We investigate whether corruption in host countries drives the different routes of Chinese economic engagement with Africa. Using data from 49 African countries for 2000–2018, we find that corruption affects each route of China’s engagement with Africa differently. Corruption in Africa is significantly negatively associated with FDI from China, but significantly positive with both trade and construction. These relationships are moderated by the availability of natural resources but do not change after the implementation of the Xi Jinping anti-corruption campaign. By disaggregating China–Africa financial engagement into its different routes, we demonstrate that the relationship between corruption and China’s presence in Africa varies with the nature of the engagement. JEL Codes: F21, F23.