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China-Africa Cooperation Doesn’t Add to Debt
Post Time: 17/09/2018

 

On September 3, the 2018 Beijing Summit of the Forum on China-Africa Cooperation (FOCAC) was held in Beijing. President Xi Jinping pledged 60 billion USD to African nations at the opening ceremony. In addition, China plans to exempt some poor and heavily indebted African countries from interest-free loans due by the end of the year. In an exclusive interview with the Sputnik news agency, Liu Qinghai, director of the Center for African Economic Studies of the Institute of African Studies at Zhejiang Normal University, said that the so-called “debt trap diplomacy,” as some in the West call it, is an inaccurate label. As a matter of fact, China-Africa cooperation seeks to realize mutual benefits.

The following is an extract of the interview:

“To help Africa is to help ourselves,” said Liu. “China and the countries of Africa are all developing. A more developed Africa and a larger African market are beneficial for China’s industrial transformation and upgrading, and a safe continent can ensure the safety of Chinese people and companies in Africa. In addition, the cooperation with developing countries will raise the status of developing countries in the world.”

When asked about the debt trap, Liu said, “It’s ridiculous, absurd. According to research by the Institute of Central African Studies at Johns Hopkins University, in 17 countries in Africa that are currently in a debt crisis or high debt risk, such as Burundi, Gambia, Cape Verde, Central African Republic, Sao Tome and Principe, South Sudan, Chad, and Mauritania, the loans from China are the minority, which means that China is not aggravating Africa’s debt burden. For example, China holds less than 2% of the debt of Cape Verde and has only four small loans to Burundi. As of 2017, China has no loans in Gambia.

“China has more loans in the other six countries, but these countries also get large quantities of loans from other financing institutions. For example, since 2000, China has provided Ethiopia with loans worth 12.1 bn USD, and the Middle East and the World Bank provided a total loan of 29 bn USD to Ethiopia. In Ghana, the external debt is about 25 bn USD, but the debt from China is less than 4 bn USD; in Mozambique, the debt from China is 2.3 bn USD out of the total external debt of over 10 bn USD; in Zimbabwe, 77% of the external debts belong to The Paris Club and other creditors, while China only owns few.”

In answering questions about the differences between Sino-African cooperation and Western-African cooperation, Liu said, “On the whole, the two kinds of cooperation are complementary. In fact, Africa needs both China and the West. It’s not exclusionary. Take aid, for example: China mainly assists in productive infrastructure, such as transportation, roads, and industrial parks, while the West assists more in social infrastructure like health and medical care. Obviously, for Africa, both kinds of aid are necessary. China, the West, and Africa can cooperate with each other to better promote Africa’s development.”

President Xi’s 60 bn USD package includes 20 bn USD of credit lines; 15 bn USD of grants, interest-free loans, and concessional loans; 10 bn USD for a special fund; 5 bn USD to support imports from Africa; and no less than 10 bn USD in investments from Chinese enterprises to Africa in the next three years.

Under the joint initiative of China and Africa, the first FOCAC Ministerial Conference was held in Beijing from October 10-12, 2000. The conference passed the Beijing Declaration of the Forum on China–Africa Cooperation. The 2018 Beijing Summit of the FOCAC is the largest international conference hosted by the Chinese government this year. The theme of the summit was “China and Africa: Toward an even stronger community with a shared future through mutual cooperation.” The summit was presided over by Chinese President Xi Jinping and South African President Cyril Ramaphosa. Leaders from 53 African countries and the African Union attended the summit.

(Translated by Li Ziyi, edited by Kendra Fiddler)

 

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