China-Africa Trade and Investment Relations: Whither South-South Cooperation?

Abstract

This paper aims to examine the dynamics that lie behind Sino-Africa relations through trade and investment channels and provides a comprehensive understanding on the determinants and interactions of these two modalities of cooperation in the Sino-African case. The paper further identifies if the same patterns prevail in China’s relationships with her other Southern counterparts by analyzing the interactions between China with Latin America and the Middle East. The results consistently suggest that market potentials and similar distribution of FDI stocks not only matter for Sino-Africa trade ties but also in trade cooperation between China and the other southern regions. However, strategic interaction between exports and FDI do not drive China’s strategic move into Africa and the other Southern regions. China’s trading and investment roles in Africa are therefore a reflection of South-South economic order that responds to the market. In short, Africa does not present a unique case in China’s South-South strategy.

Keywords: Sino-African relations, south-south cooperation, exports, investment, gravity model

JEL Classification: F4, F21, F35, P45