The underlying factors of China's Belt and Road Initiative and its operations in Africa are as follows:
- China's excess capacity in infrastructure construction.
- The need to find alternative investment options outside of the US dollar for the accumulated foreign reserves resulting from China's perennial trade surplus.
- China does not have a dominant position in developed countries, so it focuses on developing countries as its main business targets (in contrast to the United States).
Conversely, during Biden's term, the United States also aims to operate in Africa, but is constrained by:
Profit-oriented foreign direct investment (FDI), and US multinational companies have many high-profit investment opportunities globally. In Africa, the focus is on high-profit investments such as oil and gas. The United States is a net capital inflow country, and it can be understood as a banker or venture capitalist. It has return rate requirements for the money it takes from limited partners (LP), so its investments must target high returns, otherwise LPs will withdraw their capital.
The United States does not have outstanding infrastructure capabilities and has poor competitiveness. For the same project, if the cost is too high, it cannot be profitable.
These characteristics determine that the competitive strength of US capital in Africa is far lower than that of Chinese capital. Conversely, in Europe, Japan, and other places, the competitive strength of the United States is also far stronger than that of China.
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