McKinsey plans to cut about 500 jobs in China, reducing its workforce by a third as part of a strategic revamp focused on minimizing security risks and decreasing government-linked clients.

McKinsey Job Cuts in China

McKinsey & Company, the renowned US consulting firm, is reportedly laying off approximately 500 employees as part of a significant restructuring in its Chinese operations. This decision reflects the company’s shift away from government-linked clientele, a strategy aimed at mitigating political and security risks in the region.

Workforce Reduction

The job cuts will result in a reduction of McKinsey’s workforce in China by roughly one-third. Over the past two years, the firm has been downsizing its personnel across Greater China, which includes Hong Kong and Taiwan, affecting hundreds of positions. As of June 2023, McKinsey employed nearly 1,500 individuals in Greater China.

Strategic Separation

To address rising security concerns, McKinsey is separating its China unit from its global operations. This move aims to enhance operational security while navigating the complexities of the Chinese market. McKinsey has not yet commented on these developments following a request for information.

Source : McKinsey Cuts 500 Jobs Amid Revamp of China Business – WSJ

China plans to deepen its relationship with Africa, pledging $51 billion in loans and investments, aiming for increased diplomatic ties, economic growth, and expanded influence amidst Western concerns about debt-trap diplomacy.

China’s relationship with Africa is set to deepen. At a summit in Beijing in early September, China’s president, Xi Jinping, pledged to deliver US$51 billion (£39 billion) in loans, investment and aid to the continent over the next three years, as well as upgrading diplomatic ties.

Beijing’s close engagement with Africa is not new. Since 1950, the first overseas trip of the year for Chinese foreign ministers has almost always been to one or more African countries. But Xi’s commitments are still sure to raise concerns in the US and other western countries, which are competing with China for global influence.

They may well also bring back fears of China using “debt-trap diplomacy” to push African countries into default and thereby gain leverage over them. Such is the strength of this narrative that South Africa’s president, Cyril Ramaphosa, felt compelled to deny it at the summit.

The notion of Chinese debt traps, particularly the infamous case of Sri Lanka’s port of Hambantota that, in 2017, was leased by the Sri Lankan government to a Chinese company to raise liquidity, has been debunked several times.

But with African populations and economies growing, and China’s engagement with them continuing to deepen, it is important to understand what China hopes to achieve with its diplomacy.

China’s engagement with Africa is strategic as well as economic. Whether it’s gaining votes at the UN, better access to resources, or increasing the international use of its currency, China’s diplomatic relations with Africa play into its ambitions of being a major player in a multipolar world.

Chinese children hold national flags as they prepare for the arrival of Togo’s president, Faure Gnassingbe, at Beijing International Airport ahead of the summit.
Ken Ishii / Pool / EPA

The long game

From a purely economic perspective, Africa is a potentially lucrative market for China. With its under-served market and booming population, the scope for expansion into Africa offers huge potential for Chinese firms.

This is particularly true now that the African Continental Free Trade Area (which was established in 2018) opens up the possibility of cross-border value chains developing in Africa.

Most of the goods that China imports from Africa are natural resources. Many of these resources have strategic relevance, for example, in manufacturing batteries. In return, Chinese companies export a wide range of goods to Africa, including manufactured products, industrial and agricultural machinery, and vehicles.

In terms of foreign direct investment, Chinese companies are still only the fifth-largest investors in Africa after their Dutch, French, US and UK counterparts. But their ascent has been relatively quick, and while western companies are focused on resources and the financial sector, Chinese ones also invest heavily in construction and manufacturing.

Chinese companies are major players in Africa’s construction sector, often working on projects funded by loans from Chinese banks to African governments. In 2019, for example, Chinese contractors accounted for about 60% of the total value of construction work in Africa.

Some of the infrastructure financed by China has done little to improve trade or economic development in Africa. And it has, admittedly, also contributed to the increased debt burden of several African countries.

The costly expressways that connect Nairobi in Kenya and Kampala in Uganda to the respective international airports, for instance, have made life easier for city elites and international travellers. But they have not led to economic growth.

So, China has moved to recalibrate its infrastructure finance in recent years. In 2021, Xi introduced the concept of “small and beautiful” projects better targeted at the partner country’s needs – a concept he repeated at the recent summit.

It is this alignment with the requests of African leaders that differentiates China’s engagement with Africa from that of the west. A key request of many African leaders is for investment in manufacturing value chains and imports of African processed goods rather than just raw resources.

Xi’s keynote speech addressed these two concerns. He promised more investment in key sectors and to allow more African goods to enter China without duties.

The construction of the Nairobi Expressway was supposed to decongest Kenya’s capital city, Nairobi.
Daniel Irungu / EPA

China’s support to African nations is political as well as economic. Its policy of non-interference in Africa’s internal affairs have been well received by African leaders – a sharp contrast to western nations who have often tied their support to the respect of certain social or economic conditions.

This has, in turn, bolstered China’s diplomatic influence on the continent. A good indicator of this influence is how many countries maintain diplomatic relations with Taiwan, which the Chinese government sees as part of China’s territory. In Africa, only Eswatini has full relations with Taiwan and just a handful of other countries have representative offices.

Another Chinese goal is to expand the global reach of its currency, the renminbi. Its motive here is to challenge the dominance of the US dollar, which gives America control over transactions anywhere in the world.

Since the late 2000s, the People’s Bank of China has signed bilateral swap agreements with Morocco, Egypt, Nigeria and South Africa to conduct transactions in renminbi. And China is aiming to increase the use of renminbi in official lending, both through domestic banks such as the China Development Bank and regional institutions such as the New Development Bank.

Much like Africa’s western partners, China pursues both political and economic interests in its dealings with the continent. But, with western leaders paying little attention to Africa, China doesn’t need to pursue debt-trap diplomacy to increase its influence there. It just needs to put forward a better partnership offer to gain ground.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

In the first eight months of 2024, China’s overseas direct investment (ODI) reached RMB 789.45 billion, a 12.5% annual increase. China’s ODI covers 189 countries, with significant investments in Asia, particularly Hong Kong, and diverse sectors like leasing and construction.

According to data from China’s Ministry of Commerce (MOFCOM) and the State Administration of Foreign Exchange (SAFE), in the first eight months of 2024, China’s total ODI reached RMB 789.45 billion, a year-on-year increase of 12.5 percent in yuan terms (US$110.99 billion in dollar terms, up 10.6 percent). Chinese investors made non-financial direct investments in 6,762 overseas enterprises across 151 countries and regions, with a total investment of RMB 669.24 billion, up 14.3percent (US$94.09 billion in dollar terms, up 12.4 percent).

This jump followed the already high ODI record in 2023. In 2023, China’s ODI flow reached US$177.29 billion, an increase of 8.7 percent from the previous year, accounting for 11.4 percent of the global total. China has ranked among the top three globally for 12 consecutive years (following the United States and Japan) and has held over a 10 percent share of the global total for eight consecutive years. By the end of 2023, China’s ODI stock stood at US$2.96 trillion, maintaining its position among the top three globally for seven consecutive years.

The investment sectors remain diverse—in 2023, China’s ODI spanned 18 sectors of the national economy. Investments in leasing and business services, wholesale and retail, manufacturing, and finance accounted for nearly 80 percent of the total for the year. Investments in the construction industry and the information transmission/software and information technology services sectors grew rapidly, with growth rates of 97.2 percent and 34.9 percent, respectively.

In this article, we delve into China’s 2023 ODI data and navigate the major trends and dynamics in China’s ODI landscape.

By the end of 2023, China’s ODI spanned 189 countries and regions, covering 80.8 percent of the globe. The distribution highlights key areas of focus across different regions.

In Asia, China had an investment stock of US$2,014.84 billion, making up 68.2percent of its global total. The majority of this was concentrated in Hong Kong (87 percent of China’s investments in Asia), with significant investments also in Singapore, Indonesia, Macao, Vietnam, Malaysia, Thailand, and Laos.

Read the rest of the original article.