Debt worries intensify China cuts financing commitments to Africa

China will reduce its funding to Africa by a third in the next three years, which shows that Beijing is becoming more cautious about the continent’s debt.

In the video address At the triennial China-Africa Cooperation Forum held in Senegal, Chinese President Xi Jinping pledged to provide African countries with US$40 billion in investment, credit lines, trade financing and special drawing rights.

Although this is a reduction from the US$60 billion promised in the two previous China-Africa Cooperation Forums, Xi Jinping emphasized his commitment to a “win-win” relationship.

In addition, the Chinese President promised 1 billion doses of Covid-19 vaccine, but he did not provide a timetable. He also promised to strengthen cooperation in solar energy, wind energy and other renewable energy investments, and to simplify procedures to increase imports of agricultural products from African countries.

Chidi Odinkalu, senior manager of the Open Society Foundation in Africa, said that the reduced financial commitments show that Beijing no longer needs to work so hard in Africa. “China’s strategic goal is to get involved in this door. Now it is at the door, and it can choose to stipulate terms,” ??he said.

He criticized some African governments for relying too much on Beijing’s loans. “The large amount of credit that some of them rely on makes them dependent on any sensible concept of sovereignty,” he said.

Carlos Oya, an expert on Sino-African relations at Soas University of London, said that given the current situation, Xi Jinping’s vaccine promise is of great significance. fail The West’s initiative to supply the African continent. “Billion doses of vaccine is a big promise,” he said. “If they do, it will make the rest of the world look bad.”

Aoya agreed that the proposed funding cuts show “concerns about the ability of African countries to absorb so much debt.”

The International Monetary Fund classifies more than 20 African countries as countries at high risk of debt distress or already in debt distress, and this list has increased due to the Covid-19 pandemic.

According to the latest data on China’s loan to Africa database compiled by Johns Hopkins University scholars, China’s loan commitments to Africa peaked at US$29.5 billion in 2016, but fell to US$7.6 billion in 2019.

“In the past, many African countries borrowed money to develop their economies, and they believed that if the economy continued to grow, they could repay their debts,” said Keju, head of the Central Africa Corridor at Absa Bank, headquartered in South Africa. “Covid has brought fundamental changes to the basic situation, and we have seen some discussions on debt restructuring and debt relief.”

last year, ZambiaIt has borrowed heavily from China and commercial banks, becoming the first African country to default on euro bond loans.The President of Angola, the largest African borrower from China, João Lourenço (João Lourenço) recently Tell the financial times After agreeing to reduce or forgive about US$20 billion in debt, Beijing is unlikely to make more concessions. Ethiopia is another major recipient of Chinese loans, and its economic prospects are bleak after being in trouble. civil war. It also seeks debt relief.

A sort of white paper The news released by the cabinet of the State Council on the eve of the Forum on China-Africa Cooperation confirmed the shift in focus of the Chinese government.

“China is promoting a new development model. The domestic economy and international participation are complementary, with the former as the mainstay. China’s development will create more opportunities for the development of Africa.” It promised to transform China’s public health assistance during the pandemic into a longer-term Cooperation to improve Africa’s public health system.

Despite signs of caution, China is still the largest bilateral lender in the world’s poorest countries, including many countries in sub-Saharan Africa. China accounts for about one-fifth of all loans.

China is also the largest bilateral participant in the G20’s debt-servicing moratorium initiative last year, which aims to help poorer countries fund the pandemic response. But critics, including World Bank President David Malpass, blamed the lack of transparency in its debt contracts.

Some people, including Africa, also accused China of trying to get governments into a debt trap. Beijing rejected this claim, saying it never tried to convert debt into ownership of specific African assets.

Additional reporting by Jonathan Wheatley in London

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