Why is China building power plants across Sub-Saharan Africa? What exactly motivates its involvement in the sector? What does it hope to gain, and what does this mean for countries on the receiving end of its infrastructure support? Is this simply a gesture of South-South solidarity, or are there deeper strategic and economic drivers at play?
These are not idle questions. They go to the heart of how energy infrastructure is financed, negotiated, and delivered across the continent today. For governments, developers, and utilities looking to close the electricity access gap, understanding China’s incentives is not just helpful – it is foundational.
To launch this series, we begin with the “why.” Exploring the motivations behind Chinese engagement in Africa’s power sector sets the stage for navigating the “how” in future editions. These motivations are not speculative. They are reflected in decades of policy, embedded in the structure of investment deals, and shaped by China’s evolving domestic economic landscape.
Broadly, China’s overseas energy investments in Sub-Saharan Africa can be viewed through two major lenses. The first is resource security. China’s domestic resource base cannot adequately meet the demands of its large population (over 1.4 billion as of 2022), particularly for energy-related commodities. The country has limited reserves of high-quality oil, natural gas, and certain critical minerals essential to both conventional and renewable energy production, such as cobalt, lithium, and rare earth elements. In contrast, many African countries are rich in untapped or underdeveloped reserves of these same resources.
This disparity has created a trade dynamic in which infrastructure development is exchanged for access to natural resources, often through what is known as resource-backed finance. In these projects, Chinese institutions finance and build power infrastructure partly in exchange for long-term access to oil, minerals, or other commodities. The resources may be sold directly to Chinese buyers or used as collateral or to repay infrastructure loans.
This model gained traction in the early 2000s, when China’s rapid industrialisation outpaced its domestic energy supply. Within a few decades, China shifted from being a net oil exporter to one of the world’s top three oil importers. China consumes around 10 million barrels of oil per day, with over 60 percent of that being imported. More than one million of these barrels are sourced from African countries, with Angola consistently ranking among China’s top oil suppliers, followed by Sudan. The resource-backed model can offer mutual benefits: African governments receive infrastructure critical to development, while China secures long-term access to essential inputs for its economy.
Notwithstanding the discussion above, resource-backed loans constitute just 8 percent of Chinese lending to the region. However, they have received disproportionate attention in both academic and policy circles. Further, despite popular characterizations of Chinese investment as being driven solely by resource extraction, China did not invent the resource-for-infrastructure model. In fact, China adopted this approach based on its own development experience. In the 1970s and 1980s, China secured financing from Japan, the United States, and the United Kingdom to build infrastructure, offering resource-backed repayment mechanisms in return. These early experiences helped shape China’s current approach to development cooperation.
Still, not all of China’s infrastructure investments target resource-rich countries. Some of its engagements, such as those in Mauritius, are in countries with limited extractive potential. This points to a second motivation: the expansion of overseas markets for Chinese goods, services, and expertise.
As China’s economy has matured, domestic demand for new energy infrastructure has slowed. By the late 2000s, China had reached an annual installation pace of nearly 100 gigawatts per year, creating a highly capable but increasingly saturated electricity supply sector. With fewer opportunities at home, state-owned enterprises with deep capacity in engineering, construction, and manufacturing of power generation infrastructure began looking outward.
The more generation capacity sits idle in China, the more likely Chinese policy banks are to support projects abroad.
To support this outward shift, the Chinese government rolled out its “Going Out” strategy, later complemented by the Belt and Road Initiative. These policies encourage Chinese firms to pursue projects overseas, often with the backing of policy banks such as the China Development Bank (CDB) and the Export-Import Bank of China (CHEXIM). Sub-Saharan Africa’s substantial infrastructure needs and its openness to international partnerships made it a strategic partner in this endeavour.
In many cases, Chinese companies enter new markets by taking on early-stage or low-margin projects to establish a foothold. It is the hope that these initial engagements lead to additional contracts or longer-term collaborations, boosting the overall commercial viability of China’s portfolio in the country, especially when it comes to state-sponsored projects funded by CDB and CHEXIM.
Scholars have captured this dynamic using the framework of “push” and “pull” factors. Push factors are internal pressures within China, including industrial overcapacity, slowing domestic growth, and the strategic goal of internationalizing state-owned firms. Pull factors refer to the needs and conditions in host countries, such as demand for infrastructure, market access, and diplomatic alignment.
Recent studies testing these hypotheses through econometric models have yielded some revealing insights. The saturation of China’s domestic power sector stands out as the most consistent predictor of overseas financing decisions. In simple terms, the more generation capacity sits idle in China, the more likely Chinese policy banks are to support projects abroad. This pattern holds especially true in the energy sector, where large-scale construction and manufacturing capabilities need to be continuously deployed to remain viable.
Interestingly, the same study finds little evidence to support the idea that diplomatic relations, resource acquisition goals, or even bilateral trade flows are significant drivers of Chinese energy finance. This is a critical insight. It challenges the often-repeated assumption that Chinese investments in Africa are primarily geopolitically motivated. Instead, the picture that emerges is one of commercial rationality shaped by structural economic forces on both sides of the transaction.
The Importance of Understanding the “Why”
In light of this, two interlinked motivations stand out as essential to understanding China’s investments in Africa’s power sector: first, the need to access larger and more dynamic markets for Chinese goods and services; and second, the existence of demand in those markets for what Chinese firms can offer. These are not mutually exclusive, nor are they entirely new insights. Yet their centrality is increasingly validated by empirical research and observed financing trends. While other motives, such as diplomacy, ideology, or resource extraction, may play a secondary role, they do not consistently determine investment flows.
For governments in Sub-Saharan Africa, this presents both opportunities and challenges. The alignment between Africa’s infrastructure needs and China’s industrial objectives creates room for mutually beneficial cooperation. However, success is far from automatic. Misaligned expectations, weak project preparation, and limited understanding of how Chinese institutions operate can hinder progress. Engagement with Chinese partners is not a one-size-fits-all process. It requires careful coordination, clear communication, and the ability to structure projects that appeal to both Chinese commercial interests and local development objectives. Projects that offer replicable models and scalability are more likely to attract serious consideration from Chinese entities.
This is precisely why understanding China’s motivations is so important. Knowing that China’s investments are shaped by domestic overcapacity and a strategic drive to expand market access helps governments and developers identify where interests align—and where friction may arise. It shifts the focus from abstract political assumptions to concrete, actionable insights. With a clearer sense of what drives decision-making on the Chinese side, host countries are better positioned to prepare bankable projects, manage expectations, and secure more effective partnerships.
This is part of the new CGSP series, The Porcelain Jar at the End of the Rainbow, which unpacks how Chinese-backed power projects in Africa actually work. By starting with the question of “why,” we lay the groundwork for more practical explorations of the “how” in future editions. Stay tuned as we dive deeper into the mechanics of deal structuring, financing modalities, and project execution in Chinese-supported power projects across the continent.
Adjekai Adjei is CGSP’s Non-Resident Fellow for Africa.
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About This Series
This article is part of “The Porcelain Jar at the End of the Rainbow,” a new series from the China Global South Project that unpacks how Chinese-backed power projects in Africa actually work. As global development partners shift and electricity demand rises, understanding China’s role — from financing and procurement to project delivery — has never been more important. Each installment offers practical, field-informed insights for policymakers, developers, and researchers navigating complex infrastructure environments.
The series is complemented by CGSP’s interactive Energy Tracker, a tool that maps Chinese-supported power generation projects across Africa, including data on capacity, financing, ownership, and implementation status.
