Sustainable Development and China–Africa Engagement: A Resource-Centric Analysis

The increasing economic engagement of China in Africa through foreign direct investment (FDI) and trade has raised concerns about its environmental consequences, particularly resource depletion. While the existing literature highlights the role of FDI and trade in resource exploitation, the varying impacts across governance contexts remain underexplored. This study investigates how Chinese FDI and trade influence resource depletion in Africa, integrating institutional and resource curse perspectives to explain divergent outcomes. Using dynamic panel data models and the system generalized method of moments (SGMM) to address endogeneity, we analyze data from 28 African countries between 1998 and 2022. The results show that Chinese FDI significantly accelerates resource depletion—particularly total resources, energy, and forests—especially in low-governance countries. In contrast, Chinese trade exhibits a limited relationship with depletion, with significant effects only on energy resources in weak institutional settings. Notably, neither FDI nor trade has significant effects in high-governance countries, underscoring the protective role of strong institutions. The study contributes to the literature by demonstrating how governance quality mediates the environmental impacts of Chinese economic engagements. It offers policy insights for African nations, emphasizing institutional strengthening to align foreign investments and trade with sustainable resource management. These findings call for balanced economic policies that prioritize environmental sustainability alongside economic growth.