China has pledged to forgive 23 interest-free loans for 17 African countries and will also provide food assistance to the struggling nations.
The US wants to counter Chinaโs influence around the world by providing everything from infrastructure to vaccines and green energy. WSJโs Stu Woo explains.
China will forgive 23 loans for 17 African nations, Chinaโs foreign minister Wang Yi has announced.ย
โChina will waive the 23 interest-free loans for 17 African countries that had matured by the end of 2021,โ Mr Wang said at the Forum on China-Africa Cooperation according to aย statement.ย
He pledged that China would continue to actively support and participate in the construction of major infrastructure projects in Africa through financing, investment and assistance.
โWe will also continue to increase imports from Africa, support the greater development of Africaโs agricultural and manufacturing sectors, and expand co-operation in emerging industries such as the digital economy, health, green and low-carbon sectors.โ
Mr Wang also pledged that China would provide food assistance to the 17 African nations.ย
Critics argue China is involved โdebt trap diplomacyโ, alleging the country issues loans in order to eventually secure strategic international assets.ย
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South Asian country Sri Lanka granted China Merchants Ports Holdings a 99-year lease on the $US1.5 billion ($A2 billion) Chinese-built deepwater Hambantota Port in 2017 after falling deep into debt.ย
Kenya, South Africa and Uganda are among numerous African states that have borrowed heavily from Chinese lenders.
According to World Bank data from 2020 cited byย Forbes, the African nations with the highest external debt to China as a percentage of gross national income are Djibouti (43 per cent), Angola (41 per cent) and the Democratic Republic of Congo (29 per cent).ย
African countries have also enthusiastically joined Chinaโs transcontinental Belt and Road Initiative to build port, rail and land infrastructure, Beijingโs modern-day Silk Road.
Australia scrapped a deal between Victoria and China for Belt and Road Initiative infrastructure in 2021, calling it โinconsistent with Australiaโs foreign policyโ.
But the concept of a Chinese โdebt trapโ has also been criticised, with aย study in 2020ย finding China had restructured or refinanced about $21 billion of debt in Africa between 2000 and 2019. The study also noted there was no evidence of โasset seizuresโand that Chinese lenders had not used courts to enforce payments, or applied penalty interest rates to distressed borrowers.ย
Meanwhile, Adalberto Costa Junior, a presidential candidate in Angola, has vowed to examine the countyโs debt if he is elected.ย
Angola owes about $90 billion, which will cost it about $8 billion each year in amortisation, according toย Bloomberg.
โThe amount of real foreign debt is not known,โ Mr Junior said in an interview on the weekend.
Around $27 billion of Angolaโs total debt is owed to China, with the funds used to build roads, hospitals and railway links.ย
Mr Junior warned that any borrowings not linked to infrastructure projects could be renegotiated.
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