Complementary Development between China and Sub-Sahara Africa: Examining China’s Mining Investment Strategies in Africa

Abstract

China’s recent national and international regional development strategies emphasize both the deepening of the domestic market and the exploration of new markets and resource suppliers to support China’s industrialization. The cooperation with, and investment in, Africa has become an integrated part of China’s international regional development strategy. Investment in Africa is often the result of a decision process that requires balance among local complex political, economic, social, and geological conditions. Proper decision support analysis is the key for success or failure of complementary development. Based on location theories, the current study analyzes China’s mining investment in Africa and derives a set of indicators to form the basis for evaluating China’s investment strategies in the mining industries in Africa. A multi-criteria decision making (MCDM) approach, the VIKOR method, is applied to evaluate six African countries based on this set of indicators. Results suggest that while resource abundance and value are important factors for mining investment decisions, political stability and local legal system restrictions are weightier in the decision-making process. China’s outward foreign direct investment (OFDI) in mining industries in Africa is more inclined to countries with stable political environment, resource endowment and greater value advantage so that both parties can maximize the benefits from such investment.