Chinese Prime Minister Xi Jinping promises to write off part of Africa’s debts

China will exempt certain African countries from interest-free loans due by the end of this year, President Xi Jinping He said late Wednesday. He spoke at the summit about how China and Africa can fight the pandemic together.

Xi did not say which African countries would be exempted or how much debt would be wiped out completely.

According to independent estimates, African countries are heavily indebted to China. Approximately 20% of Africa’s public external debt was owed to China in 2018, according to the agency’s estimate Jubilee long-wave campaign, a UK-based charity that advocates for debt cancellation for poor countries.
Chinese lenders signed $ 152 billion in loans to African countries between 2000 and 2018, according to a special report released on Thursday. Chinese African Research Initiative (CARI), a research program at Johns Hopkins University University of Advanced International Studies.

“The world is going through profound changes unseen in the century,” Xi said. “Given the new opportunities and challenges we face, closer cooperation between China and Africa is needed more than ever before.”

A fraction of what Africa owes

The Chinese leader also promised that his country would provide “greater support” to African countries that have been hit hardest by the virus or are under financial stress. For example, he suggested that China could give more time to repay other debts, for example.

Xi’s announcement comes that the coronavirus pandemic is causing significant hardship to some of the world’s most developed countries, including those in Africa – and the pressures are putting pressure on creditors to retreat into it. For example, the International Monetary Fund and the World Bank are urging creditors to suspend debt repayment from Africa as a way to support some of the continent’s poorest countries as they face outbreaks from the epidemic.

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But analysts point out that interest-free loans make up only a fraction of the debt that African countries owe to China. The CARI report failed below 5% overall.

In the early 2000s, such arrangements “accounted for a significant percentage of Chinese loans,” the report said. “However, as other sources of funding from China began to increase … [interest-free loans] became a smaller and smaller share of China’s total lending to Africa. “

Canceling Africa’s debt is also not new to China. China wiped out African debt worth at least $ 3.4 billion between 2000 and 2019, mostly on mature, interest-free foreign aid loans that failed.

But the “vast majority” of loans belong to China recently expanded for Africa – including concessional and commercial loans – has never been considered for cancellation, the report adds.

An important ally

Xi’s announcement may be more about politics than the forgiveness of significant amounts of debt. The president is in In recent weeks, maintaining his country’s diplomatic ties in Africa has been a key foreign policy strategy he faces. a negative reaction from some Western democracies to tackling the coronavirus pandemic.

China, meanwhile, viewed Africa as an ally after the Cold War, and the two countries have become closer in the last two decades – especially through trade and foreign investment. The value of bilateral trade has grown twenty-fold since 2000, to about $ 209 billion 2019according to official China statistics.
As China slowly expands its power in Africa, one TV at a time
An alliance with Africa also has China has been given great influence on the continent, which has been a willing recipient of Chinese investment and infrastructure projects through the Beijing Belt and Road Initiative. For example, from 2014 to 2018, foreign direct investment in China in Africa increased by 44% to $ 46 billion, according to the latest data from United Nations Conference on Trade and Development.

However, the relationship between China and Africa is not entirely smooth. In April, Africans in the southern Chinese city of Guangzhou told CNN that landlords had evicted them from their homes and deterred them from hotels because China’s warnings against imported coronavirus cases sparked feelings against foreign nationals. Chinese officials said at the time that the country had “zero tolerance for discriminatory words and actions,” and that “China and African countries have always supported each other and have always fought the virus together.”

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Economic challenges

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

Recent data show that the recovery in China has been slow. Last month, for example, exports fell like coronavirus it continued to injure the country’s major trading partners, causing a drop in demand. And recent data on industrial production, investment activity and retail – all important barometers of the Chinese economy – he was insidious.
The Chinese economy is still struggling to recover from the pandemic

Despite this, Xi said strengthening the belt and road initiative is important after the pandemic, and reiterated that China and Africa share a “long-standing friendship”.

“No matter how the international landscape may develop, China will never give up its determination to strive for greater solidarity and cooperation with Africa,” Xi said, adding that Beijing would continue to supply African countries with medical supplies, help them building hospitals and even allowing some country there should be among the first recipients of the Covid-19 vaccine, should China complete it.

– Jenni Marsh contributed to this report.

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