Chinese and Western Development Approaches in Africa: Implications for the SDGs

Abstract

This chapter discusses the entry of China into the game of foreign finance in Africa in an international comparative perspective. We present an analysis of long-run changes in the allocation of Western aid both globally and in Africa, along with estimates of the global sectoral allocation of Chinese aid. A similar analysis is also applied to China's foreign direct investment and international trade. While previous literature has predominantly attributed China's economic embrace of Africa to domestic factors, we argue that the sectoral distribution of Beijing's foreign aid-and partly foreign direct investment-is also affected by changes in the patterns of Western aid and investment flowing to the African continent. We provide quantitative evidence for long-run trends, switches and breaks in Western development assistance. China's foreign aid typically flows into Africa's physical infrastructure and productive sectors of agriculture and manufacturing, filling the vacuum which emerged when Western financial flows shifted to other activities, most notably capacity building and good governance reforms. While the increasing trade relationships between China and Africa are often described as South-South trade, the pattern highly resembles the typical North-South trade patterns. Overall, this chapter shows that financial resources from both the traditional Western donors and emerging donors from the Global South such as China can help African recipient countries to achieve the Sustainable Development Goals. China's development assistance in Africa may serve as a complement to the kinds of foreign aid provided by the traditional donor countries.