China Begins "Colonising" Africa, New Era of Global Supply Chains Begins
China Begins “Colonising” Africa, New Era of Global Supply Chains Begins
Jakarta, CNBC Indonesia - China’s expansion in Africa is becoming increasingly significant.
A decade ago, the solar energy company Jua Power relied entirely on China’s domestic market, which was experiencing green energy expansion.
However, with the slowing economy in that country and declining profits in the solar panel industry, the company’s strategy has shifted.
In March 2025, Jua Power decided to build a production facility in the Tatu City Special Economic Zone (SEZ) in Kenya. This step marks the company’s first direct foreign investment in its history.
Jua Power’s expansion represents a broader trend of Chinese manufacturers moving their operations to Africa. According to FDI Markets data, China’s foreign direct investment (FDI) in Africa’s manufacturing sector reached US$12.3 billion in 2025.
These funds were distributed across 64 new projects, the highest annual number in the past decade. Between 2023 and 2025, China’s total investment in the region surpassed the combined investments from the United States and Europe.
Africa’s Manufacturing Dynamics
In the early 2010s, many projected that Africa would become the new global manufacturing hub, replacing China, supported by low labour costs and free trade agreements with Western countries.
However, the realisation of those projections has not met expectations. In Ethiopia, the manufacturing sector’s contribution to GDP declined from 6% in 2017 to 4.4% in 2024.
Overall, the manufacturing share in Sub-Saharan Africa was recorded at 10% of GDP in 2024, down from 18% in 1981.
Drivers of Expansion
Although Africa’s manufacturing growth has generally slowed, interest from Chinese corporations remains high. Currently, the managers of Tatu City in Kenya are negotiating with more than 1,000 Chinese companies, ranging from solar energy suppliers to glass manufacturers.
The main factor driving this relocation is the domestic market conditions in China. China’s manufacturing sector is facing low industrial profit margins and intense price wars on various commodities, including cement, steel, electric vehicles, and solar panels.
In addition to domestic challenges, Africa offers more competitive investment return prospects. Product selling prices in the African market can be three to four times higher than in China’s domestic market.
This encourages most Chinese manufacturers in Africa to focus on meeting local and regional consumer needs, rather than orienting towards global exports. The economic potential of the region is also supported by projections that 12 of the 20 fastest-growing economies in the world in 2026 will be in Africa.
Economic and Regional Trade Impacts
The presence of large-scale foreign manufacturers has the potential to deepen regional economic integration in Africa. However, this situation also raises concerns about potential pressure on local manufacturing industries.
Africa’s trade deficit with China increased by 65% to a record US$102 billion last year. As a balancing measure, the Chinese government has set a policy to eliminate tariffs on nearly all African imports starting 1 May, although this step is projected to benefit agricultural commodity exports more than manufactured products.
2026 Analysis: Supply Chain Resilience and Paradigm Shift
Entering mid-2026, the trend of Chinese manufacturing relocation to Africa shows a strategic shift from mere market expansion to efforts to build supply chain resilience.
Escalating geopolitical tensions, including armed conflicts in the Middle East in early 2026, have created significant disruptions to global maritime logistics routes. These macroeconomic conditions are forcing multinational corporations from China to mitigate risks by bringing production facilities closer to end consumer markets.
This production decentralisation strategy indicates that Africa’s role in the global supply chain is being redefined. Rather than replacing China’s position as a global export base to Western markets as projected a decade ago, Africa is now transforming into an independent regional production centre.
Chinese corporations are utilising this area as a new domestic market isolated from trade frictions between Western and Eastern blocs, while also avoiding tariff barriers often imposed by the United States and the European Union.
The main challenge for African countries ahead is to formulate industrial policies that can optimally respond to this wave of foreign capital. The influx of large-scale FDI needs to be balanced with regulations requiring technology transfer and supply chain partnerships with local business entities.
Without a structured policy framework, this manufacturing investment risks increasing the import burden for African countries, especially if raw materials and assembly components are still imported massively from mainland China.