Economic, Political and Resource-Based Models of Chinese Contracts in Africa: An Empirical Analysis

Yi Feng, Wanjun Jiang and Zhijun Yu

Chinese Economy, 2015, vol. 48, issue 3, 215-234

Abstract: This paper studies the pattern and determinants of contractual projects by Chinese contractors in Africa. Contracts by Chinese in Africa are a dominant component of China’s economic relations with Africa. They exceed China’s foreign direct investment in Africa. While similar to direct investments, contracts are based on some different considerations and are, therefore, subject to different determinants from foreign investment. This work is the first empirical study conducted on China’s contracts overseas. It explores three models: economic, political, and resource based. Of the three, the resource-based model best explains the pattern and determinants of China’s contracts in Africa. The countries abundant in petroleum and minerals tend to have Chinese projects. In addition to natural resources, we also look into the effects on contracts of market size, economic growth, education, investment, inflation, economic openness, exchange rate, regime type, governance, and bilateral relations with China. Our finding indicates that China’s contractual projects are drawn to the African countries that are well endowed in natural resources.

Date: 2015
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DOI: 10.1080/10971475.2015.1031608

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