The Nigerian press just posted a story on Chinese investment in Nigeria. According to the report, Rong Yanson, China's Economic Counsellor, said that China's stock of investment in Nigeria is $7.24 billion, covering petroleum, iron and steel, manufacturing, agriculture, fisheries and pharmaceuticals. When I saw Rong Yanson in May 2009, he told me that Chinese investment in Nigeria was around $6 billion. Both of these figures are way beyond the statistics reported in China's Bulletin of Overseas Investment. In 2008, the Bulletin reported China's FDI stocks in Nigeria to be $795.91 million. So what's the real story?
I think Rong Yanson is right. FDI statistics coming out of China are notoriously bad. In Latin America, for example, the top two destinations for Chinese FDI are reported to be ... the Cayman Islands and the BVIs! These two tax havens are obviously where Chinese companies operating overseas park their cash in order to keep it out of the strict exchange control system in China. And yet just the other day I was asked to review an academic paper that used China's official FDI data in cross-national regressions to say something about the driving forces for Chinese investment. Data this poor is not likely to prove anything beyond the truth of GIGO ("Garbage In, Garbage Out").