Chinese Development Aid and Its Economic Impact on Malawi

The Republic of China has come to be a force to reckon with in the 21st century, and this has enabled it to establish political and economic relations with other regions of the world; especially on the African continent. This paper studies the aid provision by China to Africa; with a key focus on Malawi. Chinese relations with Malawi have had an impact in contributing to the development of the Malawian economy. The main focus area of the research was investments, aid, and trade activities that have been facilitated between the government of Malawi and the government of China, and how these have contributed to Malawi’s domestic economic activity, as well as in the creation of employment. The paper sheds more light on private investments and the possible implications they have brought about on the Malawi’s economy too, just like the public investment activities. The amount of exports that Malawi contributes in this bilateral relationship is minimal in comparison to that that China exports to Malawi. Obviously with a huge difference between the two economies in terms of population, landmass, and economic size contribute to materials of exports and the level (as well as field) of investment. The Malawian economy, just like many other African nations depends on raw materials (tobacco, cotton, tea etc.) for export to China’s big population, and these exports tend to be volatile in terms of their world market pricing. Whilst, China’s exports on the other hand are value added manufactured goods, which some local traders in Malawi seem to view these investments and trade as a competitive in the local domain. Other sectors of the Malawi economy believe the bilateral relationship presents a form of neocolonialism whilst others believe China-Malawi relations to be that of development partners. Whichever way that we choose to analyze this bilateral relationship has brought about Some implications on the Malawian economy; ranging from business competitiveness, employment, wages etc. The study took uses more of a Mixed research design approach, with the use of secondary data as the main mode of sourcing data. Chinese aid has a different approach in implementation compared to other donors, and this study looks at the different forms of Chinese aid; with a focus in Malawi’s Agriculture sector as a case study. Oyejide et al. (2009) believes that China’s investments and trade in Africa varies, depending on the country and the difference is believed to be brought about due to the availability of natural resources, external partners, institutional capacity, and the desired policies that host nations employ.