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6 September 2018

China pledges $60 billion in aid and loans to Africa, no ‘political conditions attached’

By Anna Fifield

BEIJING —Chinese President Xi Jinping announced $60 billion in aid and loans for Africa on Monday while hosting more than 40 of the continent’s leaders in Beijing, saying that the money came with no expectation of anything in return. Beijing pushed back on criticism that it was shackling poorer countries with heavy debt burdens they will struggle to pay back, portraying the Chinese government as a magnanimous one motivated only to share its experience of rapid industrialization. “China’s investment in Africa does not come with any political conditions attached and will neither interfere in internal politics nor make demands that people feel are difficult to fulfill,” Xi said during a keynote address to the Forum on China-Africa Cooperation on Monday.

The money will be focused on infrastructure to help speed African countries’ development, not on “vanity projects,” Xi said. 

Details were vague, but the $60 billion included $15 billion in grants, interest-free loans and concessional loans, $20 billion in credit lines and a $10 billion special fund for development financing. Chinese companies also will be encouraged to invest at least $10 billion in Africa over the next three years, state media reported. 

The package outlined by Xi also includes medical aid, environmental protection, agricultural training and assistance, and government scholarships and vocational training for more than 100,000 young Africans.

At the last forum, held in Johannesburg three years ago, Xi also pledged $60 billion in investment. He said Monday that this money had already been granted or earmarked, so the latest announcement represented a second round of $60 billion.

The program is part of Xi’s broader Belt and Road Initiative, an ambitious $120-billion-plus project that aims to link 65 countries in Europe, Asia and Africa — together accounting for almost two-thirds of the world’s population — through infrastructure projects and trade.

At a time when President Trump is engaged in trade fights with the United States’ neighbors and allies, the Chinese leader seems to relish the opportunity to appear as a popular international statesman and champion of the liberal economic order. 

For two days in a row, every headline on the front page of the state-run People’s Daily started with the words “Xi Jinping,” as the president met with the leaders of Angola, Gabon, Mauritius, Senegal and elsewhere. He also hosted Sudanese President Omar al-Bashir, who has been charged by the International Criminal Court with war crimes and crimes against humanity.

Over the past two decades, China has gone from being a relatively small investor in Africa to becoming the continent’s largest economic partner, with bilateral trade growing at about 20 percent annually, according to a report last year from the consultancy McKinsey. Foreign direct investment has grown even faster over the past decade, at about 40 percent a year, it found.

But critics say that with many of its infrastructure projects, China is luring needy countries into “debt traps.” 

Take Sri Lanka, which last year had no choice but to grant China a 99-year lease for a Belt and Road Initiative port after it failed to attract enough business to make its loan payments.

Last month, Malaysian Prime Minister Mahathir Mohamad canceled more than $20 billion worth of planned Chinese infrastructure projects, saying he was concerned about paying for them. “We do not want a situation where there is a new version of colonialism happening because poor countries are unable to compete with rich countries,” he said during a visit to Beijing. 

Analysts have raised concerns about African countries, many of which are subject to the whims of commodity markets, not being able to repay Chinese loans.

The three countries most vulnerable because of large debts owed to China are Djibouti, Congo and Zambia, say academics at the China Africa Research Initiative at Johns Hopkins University. Zambia, which has a gross domestic product of $19.5 billion, according to the World Bank, had taken about $6.4 billion in loans from China, the researchers wrote in a briefing paper last month. 

But Rwandan President Paul Kagame, who chairs the African Union, said that rather than viewing the investment as a “debt trap,” other countries should be asking why they’re not giving Africa as much assistance as China.

“We have benefited a lot from China’s support in our social and economic programs, and that has continued to strengthen the partnership between China and Rwanda,” Kagame told the People’s Daily.

He also got in a dig at Trump, saying the forum “can show the world how countries can work collaboratively at a time when issues like trade protectionism continue to brew.”

South African President Cyril Ramaphosa also rebuffed suggestions that China is taking advantage of the continent. The leaders “refute the view that a new colonialism is taking hold in Africa, as our detractors would have us believe,” he told the forum.

Chinese state media outlets have been aggressively explaining why such investment is good for the continent — and positioning Xi as the champion of the African people.

“Africa is still at the initial stage of industrialization, and the process is very likely to collapse without sustainable investment growth,” the state-linked Global Times reported Monday. Chinese loans can help African countries improve their infrastructure, it said.

“We believe African people, instead of Western observers, know best what is most needed by the continent,” stated the paper, which often reflects official thinking. In an editorial, the paper said that the West just had “sour grapes” over China’s good relations with Africa.

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