On July 29, 2018, President Xi Jinping concluded his tour to the Middle East and Africa, after visits to Brazil, Russia, India, China and the South Africa (BRICS) Summit in South Africa. As part of this tour, Xi visited the UAE, Senegal, Rwanda, South Africa and Mauritius. These visits are part of China’s wider economic strategy to increase cooperation with Belt and Road (BRI) countries, as well as to advance what Chinese State Councilor and Foreign Minister Wang Yi described as “new prospect for the South-South cooperation”. This comes weeks after the ‘Eighth Sino-Arab Forum’ where China pledged a package of US$23 billion in loans and US$ 106 million in financial aid to Arab countries as part of what Xi described as the “oil and gas plus” model to revive economic growth and expand cooperation “on oil and gas, nuclear and clean technology” (Reuters, 2018).
Xi’s Middle East and Africa tour resulted in the signing on a number of agreements: With the UAE, Beijing signed a memorandum of understanding (MOU) on BRI infrastructure implementation, which aims to “accelerate the establishment of the first Belt and Road international exchange in Abu Dhabi, which will provide financial services to the construction of BRI in the Middle East and the Gulf region” (Xinhua, 2018). China also signed similar MOUs with Senegal and Rwanda; and with Mauritius China signed an agreement to increase cooperation on the initiative “at an early date” (Xinhua, 2018). The MOUs do not provide further precision in terms of the expected value of BRI investments. The BRI is a development strategy proposed by President Xi which aims to enhance maritime and land connectivity and cooperation between China and the world. The emphasis on ‘South-South’ cooperation has been at the hallmark of this initiative.
While Chinese global foreign direct investment (FDI) declined by 2.16% in 2017 for the first time after five consecutive years of mostly double digit growth, new investment appears to be more selective and closely aligned with the BRI. Investment in North America was impacted drastically by this decline – in the U.S., after hitting a record high of US$46 billion in 2016, Chinese FDI dropped by 35% in 2017 to US$29 billion and in Canada Chinese FDI dropped by 79% in the first half of 2018 compared to the same period in 2017 which is its lowest level since 2009 (Rhodium Group, 2018; China Institute – University of Alberta, 2018). To date in 2018, Chinese investment to countries such as the UAE , Iraq, Egypt and South Africa has increased in comparison to 2017, but it is unclear whether this trend will continue.