Trade Surplus and Outward Foreign Direct Investment in China: An Analytical Review and Implications for Africa.

Abstract

China's persistent trade surplus has become a prominent factor of the global economy, impacting global trade dynamics, macroeconomic inequalities, and international capital flows. As the second-largest economy in the world, China’s trade surplus accumulation affects both developed and developing countries, which receive growing amounts of Chinese Outward Foreign Direct Investment (OFDI). Therefore, it is crucial to comprehend the structural and financial mechanisms that connect trade surplus with OFDI, especially for Africa, where Chinese investment plays a significant role for development.

This paper provides an analytical review of the relationship between China’s trade surplus, structural transformation, and outward FDI flows, with a particular focus on the implications for Africa. Drawing on economic theory, descriptive statistics, and trend-based evidence, the study synthesizes existing literature on China’s agricultural productivity growth, sectoral reallocation, income dynamics, and foreign investment behavior. The review reveals a positive correlation between outward foreign direct investment and trade surplus, suggesting a similar trend for Africa. Future studies could provide a more detailed analysis of China’s trade surplus influence on OFDI flows to the African continent.

Keywords: Trade surplus; Structural transformation; Outward foreign direct investment, China–Africa economic relations; Analytical review

DOI: 10.7176/JESD/17-4-05

Publication date: July 30^th 2026