Dynamics and Evolution of China—Africa Economic Ties

This chapter delves into the China-Africa relationship, Chinese outward FDI, and particularly manufacturing firms moving overseas. It also reviews the evidence of China-Africa’s multifaceted relationship to understand the drivers that shaped Chinese outward FDI and critical questions such as whether Chinese companies truly invest in manufacturing, and if so, in what countries and with what kind of Chinese investors. This chapter takes a different kind of empirical approach to answer these questions. It critically engages with the literature on approaches to industrialisation, its drivers, FDI dynamics, and China-Africa relations. It also attempts to collect data from primary and secondary sources to obtain comparative insights into manufacturing FDI in Ethiopia. This helps us understand the critical drivers of unevenness and mixed outcomes. The chapter highlights that, unlike firms in infrastructure development (construction sector), services, and the extractive industry, most Chinese industrial investors are neither SOEs nor multinational corporations. As such, the chapter focuses on a crucial question central to the book’s insights: how the Ethiopian government attracted and managed Chinese FDI to promote its nascent manufacturing sectors. The question is more about the governance and management of FDI and its coherence with an industrialisation strategy. It shows the importance of governance capabilities in impacting the process and outcomes of Chinese FDI on Ethiopia’s manufacturing growth.