Decline in China’s lending to Africa doesn’t tell full picture of cooperation
Published: Mar 31, 2021 08:43 PM
Illustration: Xia Qing/GT

Illustration: Xia Qing/GT

China's lending to African countries fell nearly 30 percent in 2019, a new study conducted by the China-Africa Research Initiative (CARI) at Johns Hopkins University found, suggesting China has sharply curtailed lending to the continent due to debt sustainability concerns.

The CARI's database of China's loans to Africa mainly collects data from media reports of China and recipient countries in Africa. Holding a relatively objective stance comparing with other Western research institutions, the CARI study may offer some local details of China-Africa cooperation. However, given the inherent flaws of scattered sources which make up its database, it may not be able to tell the whole story.

According to China's 2021 White Paper on International Development Cooperation published in January, China has steadily increased the scale and further expanded the scope of its foreign aid, giving high priority to the least developed countries in Africa.

From 2013 to 2018, China allocated a total of 270.2 billion yuan ($41.25 billion) for foreign assistance in three categories - grants, interest-free loans, and concessional loans. In the five years, China's assistance to African countries accounted for 44.65 percent of its assistance to all regions, which is substantially ahead of other regions in the world.

Since the outbreak of the COVID-19 pandemic, China has ramped up efforts to help African countries to jointly fight against the public health crisis, from donating medical supplies, sending medical teams to postponing debt repayments. As the largest contributor to the G20 Debt Suspension Initiative, China has written off matured interest-free loans for 15 African countries.

While proactively extending assistance to more African countries, China also has enhanced the approval and regulation on lending, by improving the working procedures. China will be more prudent and conduct scientific evaluations on overseas lending projects. Although there seemed a reduction in loans in 2019, in general, China's foreign aid will not decrease.

From a geopolitical point of view, no country outside the region has established absolute dominance on the continent. Western countries are trying to start a fierce strategic competition there. As China and African countries strengthened cooperation, the US and other Western countries have been more closely followed relevant progress and increased discrediting China-Africa ties.

For years, some Western media outlets have tried to play up China's "political agenda" in aid to African countries and to question the sustainability of China-Africa economic cooperation. But the baseless speculation and ill-intentioned lies have all been proved wrong eventually and didn't impact the strategic friendship between China and African countries. 

As the COVID-19 pandemic continues to take a toll on global economy, the economies of least developed countries in Africa has become more fragile and vulnerable, which requires more external support to endure the difficult times. Many indicators of the 2030 Agenda for Sustainable Development has stalled in Africa and many countries in the region are facing severer development risks.

Meanwhile, due to the impact of the pandemic, all major economies in the world, except China, have been affected to varying degrees, limiting their ability to provide assistance to Africa. In addition, due to rising protectionism, these countries are under pressure from rising unemployment rates and other issues, and they will also transfer foreign aid funds to support domestic economy. Against this backdrop, China-Africa development cooperation, or China's assistance to Africa, is being viewed with higher expectations.

The prospects for China-Africa cooperation are broad. From the perspective of economic structure, China and African countries have complementary trade structure. Africa can provide the products needed by the Chinese market. China also hopes to promote the sustainable development of Africa through trade.

By holding trading fairs like China International Import Expo and special trade fairs for African countries, China has ramped up efforts to boost African countries' domestic circulation, so as to realize sustainable development and resolve debt issues in the end.

The author is deputy director of the International Development Cooperation Institute, CAITEC.

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