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You've got your order reversed. China uses it's currency to buy investments in Africa. The Africans now have a bunch of Chinese currency, and clearly, they are
by whack 9y ago
You've got your order reversed. China uses it's currency to buy investments in Africa. The Africans now have a bunch of Chinese currency, and clearly, they are going to do something with it. Most likely they will use it to buy consumer goods made in China. Thus creating a trade deficit that's exactly equal to the investment surplus.
There's nothing mysterious or sinister about the balance of payments. It's a mathematical and accounting tautology. I suggest spending some time reading about it from a good source, if you're still skeptical.
- mistermann 9y agoOf course the net exchange of money within the global economy must net to zero, but that's a very different thing than saying that the $ the US sends to China in exchange for manufactured goods must either be used to purchase US goods or invest in the US, as was the initial claim.