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Aug 22, 2015

It's a widespread misconception that just because China is Africa's top trading partner, it's also the continent's largest foreign investor. In fact, China's ranks seventh overall in FDI, far behind the United States that has long been Africa's largest source of foreign investment. That may soon change, though, due in part to China's rapidly evolving economy. With production cost steadily rising at home, Chinese firms are now aggressively looking to shift manufacturing overseas, particularly in places like Africa. Separately, the Chinese consumer may help drive this trend as well. Amid a faltering stock market and a pronounced slow down in the domestic economy, Chinese shoppers are likely to hold back on spending in the near term. This will likely accelerate China's "Going Out" policy as companies search abroad for profits to make up for the slack back home. Brookings Institute China scholar David Dollar recently co-wrote a new report on Chinese FDI trends in Africa and joins Eric & Cobus to explain where the Chinese are investing on the continent and in what sectors.