China’s initial wave of investments in Africa focused on natural resource extraction. Their demand for metals and energy was so large that it actually boosted global commodity prices overall, which in turn accelerated growth across the African continent.
These times of China propping up global commodity prices are now over, as it has built up excess capacity in many sectors and now faces slow investment growth. This lower demand has contributed to the overall slump in global commodity prices since 2014, making it unlikely that China will again fulfil the role of driving commodity prices. Rather, its position has now shifted to becoming the largest exporter of capital. This provides new opportunities which governments in Africa should actively position themselves to benefit from.
Attracting labour-intensive value chains