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China helped fund Kenya’s Standard Gauge Railway (SGR) which provides a high-speed connection between Mombasa and Nairobi to facilitate the import and export of goods. Photo: Bloomberg
Opinion
Editorial
by SCMP Editorial
Editorial
by SCMP Editorial

China must allay any debt-trap fears in its dealings with Africa

  • Helping bolster trade and supply routes in developing parts of the world are to Beijing’s advantage and it has all to lose by impoverishing nations
SCMP Editorial
SCMP Editorial
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Accusations in the West that Beijing is trying to trap African countries in debt with its infrastructure projects and loans make no sense. China has all to lose by impoverishing nations that it needs to counter the trade tariffs, restrictions and bans on Chinese firms imposed by the United States and its allies. Helping boost and bolster trade and supply routes in developing parts of the world are to its advantage and there is no evidence of intentions to the contrary. It is in China’s interests to keep African growth sustainable and stable.

Foreign Minister Wang Yi expressed that sentiment to African leaders at a conference in Beijing last month. Chinese officials and firms are only too aware of the criticism levelled against the Belt and Road Initiative and are eager to allay flawed perceptions. US President Donald Trump’s administration has been attempting to discredit the ambitious infrastructure and development scheme and undermine China’s relations with participating countries. Understandably, at the meeting Beijing focused on putting greater emphasis on sustainability and seeking wider private sector participation and partnerships in what it funds in Africa.

At a time when globalisation and multilateral relations are under threat, Africa needs such assurances. Ties with China have for decades been based on equality and mutual benefit and the belt and road was formulated with those in mind. Claims that Chinese aid and loans are structured in such a way that they lead to indebtedness and force nations to bow to Beijing’s demands are ironically coming from former colonial powers or, as in the case of the US, a self-interested country eager to break up geopolitical alliances.

Africa as a whole has a high level of debt; while the accepted ceiling of debt for developing countries as a ratio against gross domestic product is 40 per cent, that of the continent is 50 per cent. Even though China has stepped up its trade and investment, its loans account for just 5 per cent. Only in one of Africa’s 54 nations, Angola, do Chinese loans outweigh those of other countries.

President Xi Jinping last year pledged US$60 billion in assistance, investment and loans for African projects, matching an amount given in 2015. Beijing has recognised the belt and road needs greater transparency and flexibility. Africa is now an important market for trade and investment. Huawei and other Chinese technology firms blocked by Western governments on unfounded national security grounds are only too aware of that; their high quality and cost-effective telecommunications and tech solutions are eagerly sought.

But while some opinion polls show Africans have a favourable attitude towards China, there are also worrying sentiments. Beijing has to be alert to concerns and never take circumstances for granted.

This article appeared in the South China Morning Post print edition as: China must allay any debt-trap fears in its dealings with Africa
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