(Ecofin Agency) - Until now, China has focused its investments in Africa on major infrastructure projects. Beijing now intends to change course as its industrial production overcapacity is getting wider.
Chinese President Xi Jinping (photo) announced, Thursday (August 24), his country plans to support industrialization and agriculture in Africa, after focusing for almost a decade on infrastructure projects.
“China will better harness its resources for cooperation with Africa and initiatives of businesses to support Africa in growing its manufacturing sector and realizing industrialization and economic diversification,” he said at a roundtable on the sidelines of the BRICS summit in Johannesburg, South Africa.
President Xi also stressed that Beijing plans to help African countries "expand grain plantations" and "encourage Chinese companies to increase agricultural investment in Africa."
The Chinese leader's statements reflect a major shift in Chinese investment in Africa. Since the launch of the "New Silk Roads" initiative in 2013, the Middle Kingdom has pumped tens of billions of dollars into mega infrastructure such as ports, railroads, roads, and dams in Africa.
David Monyae, Director of the Centre for China-Africa Studies at the University of Johannesburg, believes that one of the reasons for that shift in investment strategy is China’s industrial overcapacity.
"Given domestic industrial overcapacity, it makes sense for China to relocate its factories to Africa," he points out, noting that several Chinese industrial companies are already doing well in special economic zones in Ethiopia and Kenya.