By Duncan Merry and Laurie Chen
NAIROBI/BEIJING (Reuters) – China declined to provide debt relief sought by several African countries this week, but pledged 360 billion yuan ($50.7 billion) over three years in credit lines and investments.
Launched in 2000, the Forum on China-Africa Cooperation (FOCAC) has taken on an increasingly important role since President Xi Jinping’s Belt and Road Initiative was launched in 2013, which aims to recreate the ancient Silk Road for the world’s second-largest economy and Africa’s largest bilateral lender.
“China is back in the lead in terms of deploying capital abroad to emerging markets,” said Hasnain Malik of Tellimer, adding that it has not yet reached pre-Covid-19 levels.
China has also sought to use the Forum on China-Africa Cooperation to counter growing competition in Africa from the United States, the European Union, Japan and other countries.
In Beijing, diplomats and delegates from around the world gathered in the Great Hall of the People in Tiananmen Square, while leaders of more than 50 African countries and Chinese officials led by Xi gathered for a group photo.
The new financial pledge is more than Beijing promised at the last Forum on China-Africa Cooperation in 2021, but less than the $60 billion in 2015 and 2018, which marked the peak of lending to Africa under the Belt and Road Initiative.
During those boom years, Beijing financed the construction of roads, railways and bridges. But a funding drought since 2019 has left Africa with stalled construction projects.
China said the new funds would go to finance 30 infrastructure projects to improve trade ties, without giving details.
The continent of 54 countries and more than a billion people suffers from an annual infrastructure financing deficit estimated at $100 billion, and needs transport links to make the new giant African trade bloc (AfCFTA) a reality.
Beijing has in recent years cut funding for such projects as its focus shifts to “small and beautiful” projects, largely due to domestic economic pressures and increased debt risks among African countries.
Asked how the new commitments fit into China’s current cautious strategy of foreign lending, a foreign ministry spokesman said there was no contradiction.
“Cooperation between China and African countries, including the specific implementation of projects, is being discussed and determined by both sides,” Foreign Ministry spokesman Mao Ning said at a regular press conference on Friday.
Currency swaps
China also said it would launch 30 clean energy projects in Africa, offer cooperation in nuclear technology and address an energy deficit that has delayed industrialization efforts.
“The outcomes of the FOCAC summit indicate momentum for green projects, especially renewable energy facilities,” said Golam Balem, head of research at Standard Bank in South Africa.
China has become a global leader in wind and solar energy, controlling large supply chains and reducing production costs, Ballem added.
Others were skeptical.
“It’s not so much the size of the investments, it’s the lack of transparency on the terms of the debt,” said Trang Nguyen, head of global emerging markets credit strategy at French bank BNP Paribas.
But success has been less clear for countries that hold a large share of their debt to China, which has made no explicit offer of assistance to countries struggling to repay their debts.
Instead, Beijing urged other creditors to “participate in dealing with and restructuring African countries’ debts under the principle of joint action and fair burden sharing.”
African leaders hoping for mega-deals for their countries have had to make do with less exciting announcements.
Ethiopia and Mauritius announced new currency swap lines with China’s central bank. Kenya said it had made progress in talks to reopen lending taps for key projects such as a modern railway linking the region.
However, there was optimism among some, who welcomed China’s growing commitments to Africa’s security, humanitarian challenges and other non-financial issues.
“China-Africa relations are now at their best in history after nearly 70 years of hard work,” Tanzanian President Samia Suluhu said on her Twitter account.
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