Foreign Investment

China’s industrial policy is aimed at rapidly expanding its high-tech sectors and developing its advanced manufacturing base, but President Trump and other leaders of industrial democracies see the plan as a threat.

While solar panels, electric buses, and wind turbines emerge, fossil fuel usage and demand for commodities continue to degrade Latin America’s environment.

Michael Clyne is political partner of the Truman National Security Project. The Trump Administration’s recent announcement of its Africa strategy offers renewed opportunities for the development of closer economic ties between the United States and Africa. In a December speech, National Security Adviser John Bolton outlined a set of business-driven initiatives, which he called “Prosper Africa.” President Barak Obama also favored a business-first trajectory for Africa over the bilateral development assistance policies generally championed before him. Though repositioned under the “Make American Great Again” banner, President Trump’s Africa strategy continues to push the business case of developing African markets.  The principal difference is a much greater emphasis on competition with China’s economic activity on the continent. The rise in Chinese interest and foreign direct investment (FDI) in Africa was punctuated by China surpassing the United States and becoming the continent’s largest trading partner in 2009 [PDF]. Throughout its rise, China has faced criticism that its projects strain public debt, import foreign labor, and exploit national workers, which Bolton described as “predatory.” Recent multilateral investment mechanisms, like its Africa Growing Together Fund, have also introduced China as a development financer, similar to the China-developed Asian Infrastructure Investment Bank. To this end, the Trump Administration has introduced a more modern U.S. investment institution for the continent in the Development Finance Institution, intended to replace the Overseas Private Investment Corporation. Globally, international business is already viewing Africa as the world’s largest emerging market, and in 2011, the value of FDI to sub-Saharan Africa surpassed [PDF] bilateral development assistance. By 2020, African consumers are forecast to contribute five times more to economic growth than the natural resource sector, a sign that the continent is beginning to overcome the “resource curse,” wherein growth was often tied to fluctuations in the price of commodities. Hence, as President Trump has observed, there are significant opportunities for American businesses in Africa’s emerging markets.  Improved U.S.-Africa commercial relations could also advance the administration’s diplomatic goals, including reforming multilateral peacekeeping operations, namely UN missions which the Trump administration believes lack accountability. Furthermore, Africa, where half of UN peacekeeping missions are based, represents one-quarter of votes in the UN General Assembly (UNGA). For the Trump administration intent on aligning member states with its UNGA voting interests, improved U.S.-Africa relations could help tilt the body’s balance. As Rosa Whitaker, former assistant U.S. trade representative for Africa, observed, the continent is the “global swing vote” of the twenty-first century. Hence, the Trump administration’s outline emphasizing the economic underpinnings of the U.S.-Africa relationship is to be welcomed, provided that initiatives like Prosper Africa lead to concrete policy and are properly resourced. In turn, it is to be hoped that American business will take advantage of African opportunities with the administration’s support.

Given its close diplomatic and security ties with the United States and its growing economic ties with China, where does Israel stand amidst the U.S.-China trade war?

Jennifer Spies led Facebook’s product development for the Middle East and Africa, and has over a decade of experience building products that connect communities. Prior to Facebook she served as a foreign policy advisor for Middle Eastern economic security, and worked with Google.org in Rwanda.  On September 3 and 4, leaders of fifty-three African nations gathered in Beijing for the seventh Forum on China-Africa Cooperation (FOCAC), where President Xi Jinping unveiled a new pledge of $60 billion in financing for Africa. While heads of state flew home praising the friendly relations between Africa and China, the summit’s tone highlighted China’s attempt to remake its image on the continent, one that has soured in recent years over concerns around China’s role as a lender. China’s presence in Africa has been much examined over the past decade, and while the United States is still the largest source of foreign investment on the continent, China’s investment pledges have increased every year since the early 2000s and are expected to surpass receding U.S. commitments in the coming years. China’s economic involvement with Africa was originally built around the concepts of “no strings attached” and a “win-win” relationship. China offered infrastructure and energy financing as an alternative to the Western model of aid and development grants tied to policy agendas like improving healthcare capabilities or strengthening democratic institutions. Since then, some of the continent’s most visible transformations have been powered by Chinese financing: Abuja’s light rail line, Dar es Salaam’s port, and the African Union headquarters in Addis Ababa.  As China’s roots in Africa deepen, the country increasingly faces accusations of burdening the continent with undue debt obligations. China has changed the composition of African debt from primarily concessional financing (such as that of the International Monetary Fund) towards market-based debt with less favorable terms. But China’s Foreign Ministry has rejected the notion that its African investments are predatory, and noted that China represents a miniscule portion of total African debt. Further, the Africa portfolio is not very significant when compared to investments in Europe and Asia. Together, these projects are part of a broader $5 trillion dollar Belt and Road Initiative (BRI), a strategy that spans sixty countries and is reshaping dynamics of trade across Europe, Asia, the Middle East, and Africa.  China’s 2018 FOCAC pledge offered $5 billion less in grants and concessional loans than previous years, representing both caution on China’s part and a worsening debt landscape in Africa. The majority of China’s infrastructure and energy programs are financed through loans, and Africa’s rising debt problems spell trouble for China. Over the past five years, two-thirds of sub-Saharan African countries saw a 20 percent increase in debt-to-GDP ratios (though this rise is not necessarily attributable to Chinese loans). Eighteen countries including the Republic of Congo, Gambia, Zambia, and Mozambique are now classified by the World Bank as high risk for debt distress, a benchmark set by economists when debt-to-GDP ratios surpass 50 percent. In some countries, like Kenya, China is now the largest bilateral creditor. President Xi underscored his commitment in this year’s summit to forgiving debt for the poorest African nations, starting with loans coming due this year.  Once the purview primarily of Western aid organizations, Africa now boasts a more diverse set of international actors. China in particular has stepped up as a major lender that benefits from Africa’s raw material exports. Increased African debt obligations and stress on emerging market currencies threaten this model from evolving much further and may destabilize the region in the coming years. A more sustainable model of economic partnership is needed.   

If Tesla goes private with significant funding from Saudi Arabia or other foreign investors, it would raise national security and ethical questions.  

China and Israel have sharply ramped up trade, investment, and cultural ties in recent years, but obstacles to closer relations may yet emerge.

This week: GDPR enters into force, CFIUS reform, a UK cabinet minister outlines the law applicable to cyberspace, and sinkholing a Russian botnet. 

The 2015 deal between Presidents Obama and Xi has held up so far. Curbing Chinese foreign direct investment in the United States might cause it to fall apart. 

Reforming the Committee on Foreign Investment in the United States does not guarantee the United States will maintain its technological advantage over China.