Determinants Of China’s Outward Foreign Direct Investment In Africa

Africa is the second largest continent of the world, and famous for its agriculture, animalhusbandry, fisheries, energy, mineral and forest resources. It has been an important investmentdestination, since China passed the "going out" strategy,. From2003to2010, China’s OFDI inAfrica has increased from$490million to$13.04billion, and increased nearly30times during7years. Intuitively speaking, China’s OFDI in Africa is driven by resource, but whether to investor not and how much to investment can’t be explained by this single factor. Africa has a specialinvestment environment, both in politics and economy. The study of which factors are affectingChina’s OFDI in Africa can help the investors analyze the investment environment, and improvethe efficiency of China’s investment in Africa.This article selected25Africa countries, which account for85%of China’s OFDI in Africa.The time span of data is from2003to2010, and the major indicators include financialdevelopment indicators, market factors, Infrastructure construction, natural resources, nationaleducation, risk factors. This article use panel data model. The empirical results show that:China’s OFDI to Africa is not determined by Africa’s rich resources. When considering whetherto invest in Africa or not, Chinese investor take many factors into account, include marketseeking factor, risk controlling, quality of labor and considering the development potential in thefuture. The host country’s GDP (on behalf of the size of the market), the Sovereign Credit Rating,the inflation rate, literacy rates, enrollment rates of colleges and universities, foreign exchangereserves, the financial legal strength, depth index of credit information, all these factors havesignificant influence on China’s OFDI to Africa countries. The host country’s infrastructurefactors don’t have significant influence on China’s OFDI to Africa countries.