Clinton was ignorant of the facts on the ground or chose to disregard them, her implication that China has been extracting Africa’s wealth for itself is utterly wide of the truth.”<sup>26</sup> This study uses data gathered from the home and host countries as well as individual companies to suggest that neither the US Secretary of State nor China’s Xinhua News Agency were correct in their statements. The fact is that Chinese investment in Africa is far from monolithic and is growing increasingly diverse and dynamic. The study shows an underlying factor behind this evolution: the rising role played by the private sector. Whereas large SOEs continue to be important players in areas of infrastructure and resource-based activities, the private sector has indisputably led the way by contributing to the non-traditional manufacturing sector in many parts of Africa.

This diverse trend has had a wide-ranging impact on Africa’s development. The injection of private capital, technology and entrepreneurial ideas offers host countries significant economic opportunities, especially in early industrialization and job creation. For these reasons, they are particularly welcome by African host countries. Nevertheless, private Chinese firms invest in Africa based on pure self-interest, i.e., seeking profits. This is what fundamentally distinguishes them from official aid or many investment projects led by their SOE compatriots. However, profit-driven investment does not bring one-sided benefits only. Well utilized, it can generate significant economic benefits for host countries – the reason one sees countries around the world competing for foreign direct investment.

An interesting finding of this study is that not only the motives but also the basic behavior of private Chinese investors are similar to those of other international investors. They make decisions on where to invest by pretty much the same determinants, i.e., market gain, production cost saving, resource and raw materials access, and risks perceived, including those imbedded in the investment environment. In fact, one may argue that the surge in private Chinese investment overseas reflects less the rising economic power of China than China’s integration into the international trade and investment market, whose dynamics press and incentivize all participating producers to move where they can produce at the lowest cost and the highest efficiency. As revealed by firm interviews in this study, to maintain their productivity and stay competitive in the global market, Chinese firms often face little choice but act in response to the changing global economic structures and conditions. Some do so by upgrading their products at home, others by moving the production to places that accommodate it better, including Africa.

There are several notable strengths and weaknesses associated with private Chinese investment, the study shows. On the up side, Chinese firms are relatively small in size, and as such are quick and flexible in responding to the African market they serve. They are incredibly adventurous, hardworking and practical, which help them in dealing with the harsh conditions in many frontier countries. On the down side, private Chinese firms are new, and therefore still inexperienced, in

> 26 Associated Press in Beijing, _Guardian_ (guardian.co.uk) Friday 3 August 2012.

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