In It for the Long Term? Governance and Learning among Chinese Investors in Zambia's Copper Sector

Abstract

The literature on Chinese economic engagement with Africa reflects widely-held views that Chinese investment is strategic, politically motivated and therefore more stable and long-term than “Western” foreign capital. In contrast this article argues that various factors underpinning the governance of Chinese state-owned enterprises (SOEs) in fact serve to promote short-term strategies. It contributes to the literature by empirically exploring this proposition through a case study of a Chinese SOE operating in Zambia's mining sector, and by examining two sets of corporate governance characteristics of Chinese SOEs: investors' relationships with the Chinese state, and firm-level strategy, structure and norms. The article finds that these governance characteristics lead to short-term strategies, including excessive cost-cutting and segregated management practices. These short-term strategies reduce the incentives as well as ability of investors to address local environmental and social concerns, thus questioning the contribution of Chinese investment to Africa's long-term development.