Much of the burgeoning research interest around Chinese economic engagement with African countries seems to conflate almost all Chinese financial flows as “FDI”. This would not be an issue if all Chinese financial flows, such as trade, aid, exports credits, and FDI, were identical in terms of causes and results. However, what is often termed “FDI” in the extant research and even popular discourse around Chinese economic engagement with the African continent does not meet either the technical or general meanings of FDI, and, unfortunately, many of these Chinese financial flows do not qualify as such. This is because much of these financial flows come as grants, loans and other forms of finance, often allocated to fund infrastructure construction. While this might seem like a minor issue, it has profound consequences for scholars and practitioners, since FDI refers to transactions that allow for control and management of the assets over the long-term (Feenstra, 1999; International Monetary Fund, 2009; Organisation for Economic Co-operation and Development, 2008; United Nations Conference on Trade and Development, 2020). It also has consequences for host country development, as in the case of FDI the main risk is borne by investors, whereas in the case of development finance, especially when it involves some form of lending (such as loans or credits), the risk is borne by the borrowing country. In other words, when investment is involved, Chinese firms risk their capital, “betting” on the possibility that they will profit in a new market against possible future losses. This paper aims to further China-Africa research by: explaining the role of development finance in the Africa-China relationship; gently reminding scholars of existing definitions of FDI and how major data sources such as the International Monetary Fund (IMF), Organisation for Economic Co-operation and Development (OECD), and United Nations Conference on Trade and Development (UNCTAD) incorporate FDI into their data; offer new datasets that use these definitions; demonstrate empirically why the distinctions between FDI and development finance are useful; and provide further resources for researchers who wish to pursue this line of research
