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1. China in Sub-Saharan Africa: Reaching far beyond natural resources

Author:
Amin Mohseni-Cheraghlou and Naomi Aladekoba
Publication Date:
03-2023
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
This work empirically examines China’s growing footprint in Sub-Saharan Africa’s investment, trade, cultural, and security landscape over the past two decades. It highlights China’s increasing appetite for Sub-Saharan Africa’s natural resources and growing young labor force—identifying the region’s consumer market as an important destination for Chinese goods and services over the next few decades. The analysis identifies more than 600 Chinese investments and construction contracts in Sub-Saharan Africa (SSA), valued at over $303 billion, signed between 2006 and 2020. Four sectors attract 87 percent of China’s investment and construction in the region: energy at 34 percent; transport, 29 precent; metals, 13 percent; and real estate, 11 percent. This is very similar to the Middle East and North Africa Region, where the energy sector attracts close to 50 percent of China’s investment, followed by transport, 19 percent; real estate, 15 percent; and metals, 6 percent. In terms of trade, this work shows that between 2001 and 2020, China’s merchandise trade with the region increased by a whopping 1,864 percent—surpassing SSA’s trade with both the United States and the European Union. In other words, from 2001 to 2020, China’s share in total merchandise trade in SSA rose from 4 percent to 25.6 percent, while during the same period, the shares of the United States and the EU in SSA’s total trade declined by 10 percentage points and 8 percentage points, respectively. The report also takes a look at China’s arms trade with the region. Twenty-two percent of SSA’s arms imports are sourced from China, making China the region’s second-largest supplier of arms and military equipment, with Russia in the lead (24 percent). Finally, the report highlights the fact that the size of Chinese migrants in Africa is estimated at one to two million, with around one million permanently residing in the region. The largest numbers are in Ghana, South Africa, Madagascar, Zambia, and the Democratic Republic of the Congo.This work is the first in a series of empirical analyses that will be conducted on China’s presence in developing economies and low-income countries.
Topic:
Natural Resources, Economy, Business, Economic Growth, Macroeconomics, Trade, and Inclusion
Political Geography:
Africa, China, Asia, and Sub-Saharan Africa

2. China’s quest for innovation: progress and bottlenecks

Author:
Alicia Garcia-Herrero and Robin Schindowski
Publication Date:
06-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
As the Chinese economy continues to decelerate, the central government is investing heavily in innovation, doubling down on research and development (R&D) spending and STEM-oriented human capital. In this paper, we assess China’s progress so far, looking at the inputs to innovation (R&D and human capital) as well as intermediate targets, such as scientific research and patents. We then evaluate how China has fared with respect to the ultimate goal of commercialising this progress, by looking at the value-added of Chinese exports and the overall productivity of the economy. We identify three potential bottlenecks that might be hindering the translation of China’s innovation efforts into productivity growth.
Topic:
Industrial Policy, European Union, Economic Growth, Innovation, and COVID-19
Political Geography:
China, Europe, and Asia

3. Can Chinese growth defy gravity?

Author:
Alicia Garcia-Herrero
Publication Date:
06-2023
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Chinese growth, astounding since the beginning of the reform era, has slowed in the last decade. We offer a baseline estimate (based on the current trend) of China’s medium-term growth rate, which we project to fall to 2.4 percent by 2035. Several factors create uncertainty around this baseline. China’s rapid aging is already incorporated into our long-term growth scenario, but its impact on growth will depend on how China’s remaining urbanisation process spreads over time, how the shrinking labour supply affects labour productivity and whether the decline in total factor productivity growth, reflecting the lack of reform during the last decade and possibly the rising role of the state, can be reversed. Investment in China, for decades the largest factor in China’s growth, is expected to contribute less to growth given the increasingly low return on assets, particularly on state-led investment. The rapid piling up of public debt is also becoming a heavy burden for the Chinese economy. Finally, the COVID-19 pandemic may have left significant scarring effects, such as structurally high youth unemployment and low investment confidence. On the upside for China, the rise in human capital and research and development expenditure may support innovation and growth, but the magnitude of this effect is uncertain, because it is unclear if higher innovation will translate into higher total factor productivity, and because of the United States’s push to contain China technologically.
Topic:
Industrial Policy, European Union, Economic Growth, and COVID-19
Political Geography:
China, Europe, and Asia

4. China Strengthens Regional Leadership Countering US Challenges

Author:
Robert G. Sutter and Chin-Hao Huang
Publication Date:
05-2023
Content Type:
Journal Article
Journal:
Comparative Connections
Institution:
Pacific Forum
Abstract:
Southeast Asia featured prominently in Beijing’s increasingly strong international efforts to portray China as a source of strategic stability and economic growth with comprehensive global governance plans supportive of interests of developing countries and opposing the United States. These efforts intensified after the landmark 20th Party Congress in October and the 14th National People’s Congress in March. They were reinforced as Xi Jinping emerged from COVID restrictions and preoccupation with domestic matters to engage actively in summitry with leaders of Vietnam, Laos, the Philippines, Cambodia, Malaysia, and Singapore. China’s economic importance for regional countries grew as did its dominance over the contested South China Sea. Its show of force against Taiwan in April had little discernible impact on China-Southeast Asia relations, while notable US advances in military cooperation with the Philippines warranted Chinese warnings that escalated during the reporting period.
Topic:
Bilateral Relations, Leadership, Economic Growth, Strategic Stability, and Regional Politics
Political Geography:
China, Asia, and Southeast Asia

5. Balancing Natural Resources and Human and Social Capital: Pathways to Economic Diversification in Mongolia

Author:
Thorvaldur Gylfason and Jean-Pascal N. Nganou
Publication Date:
09-2023
Content Type:
Special Report
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
Economic diversification has gained significant attention as a crucial factor for sustainable development worldwide. This paper addresses the risks associated with extreme specialisation and explores the potential benefits of economic diversification for Mongolia. By comparing Mongolia with its designated aspirational and structural peers, the paper aims to shed light on strategies that can foster economic and societal diversification in the country. Although Mongolia possesses favourable levels of human capital compared with its peers, its unusually high ratio of natural capital to human capital highlights the necessity of reducing reliance on natural resources and promoting human capital-intensive economic activities. The paper examines the implications of declining demand for Mongolia's key minerals, primarily coal, resulting from climate change concerns and evolving investor preferences towards sustainability, China's coal consumption reduction goals, and the enduring impact of the COVID-19 pandemic. Through this analysis, the paper offers insights into pathways for Mongolia to diversify its economy and enhance the well-being of its people by striking a balance between natural resources and human and social capital.
Topic:
Natural Resources, Governance, Democracy, Economic Growth, Human Capital, Diversification, Macroeconomics, Social Capital, Transition, and ASEAN
Political Geography:
Russia, China, Malaysia, Canada, Mongolia, Kazakhstan, Colombia, Armenia, Australia, Qatar, Chile, Peru, United Arab Emirates, Ecuador, and Guyana