Chinese Xi Jinping promises to write some of Africa’s debts

China to exempt some African countries from interest-free loans by the end of this year, President Xi Jinping I said It’s late on Wednesday. At a summit he was talking about how China and Africa could fight the pandemic.

Xi did not say which African countries would be exempted or how much debt would be directly deleted.

According to independent estimates, African countries are heavily indebted to China. Approximately 20% of the African government’s external debt owed to China in 2018. Jubilee Debt CampaignA UK-based aid group that advocates a demand for debt cancellation for poor countries.
Chinese lenders signed a $ 152 billion loan to African countries between 2000 and 2018, according to a separate report by Thursday. China Africa Research Initiative (CARI) is a research program at Johns Hopkins University School of Advanced International Studies.
Xi needs Africa more than ever when China faces a reaction in the West

“The world is undergoing profound changes that have not been seen in a century,” said Xi. “Given the new opportunities and challenges we face, there is a need for closer cooperation between China and Africa than ever before.”

Part of Africa’s debt

The Chinese leader vowed that his country will provide “more support” to African countries that are most affected by the virus or under financial stress. He suggested, for example, that China could give countries more time to repay other debts.

Xi’s announcement emerges when the coronavirus pandemic causes serious problems to the world’s least developed countries, including those in Africa – and the International Monetary Fund and the World Bank, for example, are putting pressure on creditors to call. creditors are asking Africa to suspend debt repayments as a way to support that some of the poorest countries in the continent have suffered an epidemic.

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However, analysts pointed out that interest-free loans constitute only part of the debt that African countries owe to China. The CARI report found the total below 5%.

In the early 2000s, such arrangements “made up a significant percentage of Chinese loans,” he said. “But when other sources of finance from China started to grow … [interest-free loans] It has become a smaller and smaller proportion of China’s total credit to Africa. “

The cancellation of African debt is also not new to China. According to CARI, China has erased at least $ 3.4 billion of African debt in mature and interest-free foreign aid loans, mostly in default, since 2000 and 2019.

However, the “vast majority” of the loans used by China The report stated that it has never been considered for cancellation recently given to Africa (including concessional and commercial loans).

An important ally

Xi’s statement may be more about politics than forgiving a significant amount of debt. President Over the past few weeks, his country’s preservation of diplomatic relations in Africa has made it an important foreign policy strategy because it faces Among some Western democracies, a reaction to his capture of the coronavirus pandemic.

Meanwhile, China has seen Africa as an ally since the Cold War, and the two have been intertwined in the past two decades, especially with trade and foreign investment. The value of bilateral trade has increased twenty times since 2000 and rose to $ 209 billion. 2019According to official statistics of China.
How does China slowly increase its power in Africa, a TV set at a time?
Alliance with Africa too China had a lot of impact on the continent, a voluntary buyer of Chinese investment and infrastructure projects, through the Beijing Belt and Road Initiative. For example, from 2014 to 2018, China’s foreign direct investment in Africa rose 44% to $ 46 billion. United Nations Conference on Trade and Development.

The relationship between China and Africa was not completely smooth. In April, Africans in the city of Guangzhou in southern China told CNN that they were evicted from their homes and returned from hotels because China’s warnings against imported coronavirus cases increased anti-alien feelings. Chinese officials said at that time that the country had “zero tolerance for discriminatory words and actions” and that “China and African countries always support each other and fight the virus all together”.

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Economic difficulties

And the decision to forgive debt comes at a difficult time for the Chinese economy, which shrank for the first time in decades earlier this year.

Recent data show that recovery in China is slow. For example, last month, exports fell as coronavirus continued to harm country’s major trading partnerscausing the demand to drop. Latest data on industrial production, investment activity and retail sales – All important barometers of the Chinese economy – it was overwhelming.
Chinese economy still struggling to get rid of pandemic

However, Xi reiterated that strengthening the Band and Road Initiative was important after the pandemic and that China and Africa shared a “long-standing friendship”.

“No matter how the international landscape develops, China will never hesitate in determining more solidarity and cooperation with Africa.” Saying Xi, if Beijing continues to supply medical supplies to African countries, build hospitals and even fills China, some countries are among the first buyers of the Covid-19 vaccine.

– Jenni Marsh contributed to this report.

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