The determinants of China’s foreign direct investment in Central Africa: evidence from the Republic of Congo and DRC

Abstract

Since the 1990s, mainly through multinational corporations (MNCs), foreign direct investment (FDI) from South-South regions has been growing faster than FDI flows from North-South regions. In the framework of South-South investments,beside other rising Asian economies (India and the Persian Gulf countries) China is an important source of FDI to Africa. Within the African continent itself, South Africa remains the main actor in this context by first channelling investments into the Southern African region then other African countries.Among the emerging markets is China, which ranks first as a donor, trading partner and investor country in Africa. This tends to reinforce China’s supremacy in Central Africa, as the country is pursuing its appetite or hunger for resources, mainly oil and minerals, despite the financial crisis that erupted in 2008. This strategy seems to be two-fold: there is a need in China to secure resources at home in order to sustain its economic growth and secondly there is a need for access to overseas markets for broader investments through Chinese companies.