The Competitive Edges of China's Resource-for-Infrastructure Investment Contracts in Africa

This article evaluates the competitiveness of China's resource-for-infrastructure (R4I) investment contracts in Africa and determines whether, if at all, they benefit African countries more than traditional mining investment contracts. Seeking an appropriate contractual response to China's mining investments in Africa, the article demonstrates that while R4I contracts and traditional contracts have similar advantages, R4I contracts outperform traditional contracts in certain ways. By far the sharpest competitive edge of R4I contracts is that they realize complementarities between the economies of China and African countries. While China has a vibrant construction industry but few natural resources, African countries have an infrastructure deficit and a wealth of resources. The R4I contract form caters to these complementarities best. Thus, the article's main submission is that the terms of economic exchanges in the mining sector between China and resource-rich African countries should assume, whenever possible, a R4I contract form