Africa to rene­go­ti­ate China debt at sum­mit

Kuwait Times - - BUSINESS -

JOHANNESBURG: Some African coun­tries may seek to rene­go­ti­ate re­pay­ment of ex­ist­ing debts to China as a way of help­ing their economies hit by lower crude and com­mod­ity prices, but will not turn down of­fers of new loans by the Asian gi­ant at a sum­mit this week. African coun­tries will also seek more Chi­nese in­vest­ment in fac­to­ries man­u­fac­tur­ing goods for ex­port in ad­di­tion to roads and rail­ways on a con­ti­nent long seen as a ma­jor com­modi­ties and en­ergy source for China.

Chi­nese state-owned firms in Africa face crit­i­cism for us­ing Chi­nese la­bor to build gov­ern­ment-funded projects like roads and hos­pi­tals, while pump­ing out re­sources and leav­ing lit­tle for lo­cal economies, an im­age Beijing wants to change at the Fo­rum on China-Africa Co­op­er­a­tion in Johannesburg on Dec 3-4. China Pres­i­dent Xi Jin­ping vis­its Zim­babwe on Dec. 1-2 and South Africa on Dec. 2-3, be­fore co-chair­ing the con­fer­ence in Africa’s most in­dus­tri­alised econ­omy which sev­eral African heads of state are ex­pected to at­tend.

Ex­perts are con­fi­dently ex­pect­ing China to push ahead with new loan and trade pro­pos­als for the con­ti­nent de­spite its own slow­ing econ­omy. “Key themes for Africa will be Africa’s grow­ing debt to China (and) how China’s do­mes­tic stim­u­lus can re-ig­nite com­mod­ity de­mand to help pay off the loans and in­dus­tri­al­i­sa­tion of the con­ti­nent,” said Mar­tyn Davies, Man­ag­ing Di­rec­tor for Emerg­ing Mar­kets & Africa at Deloitte. “Real de­vel­op­ment is driven not by an­other $10 bil­lion loan pledge, but by African economies in­sti­tu­tion­al­is­ing in­tel­lec­tual property and not just in­vest­ment in mines and roads.”

China is Africa’s largest trad­ing part­ner and the trade vol­ume be­tween them amounted to $220 bil­lion in 2014, ac­cord­ing to China state news agency Xin­hua. Its in­vest­ments in Africa amounted to $32.4 bil­lion at the end of 2014, ac­cord­ing to Lon­don-based BMI Re­search. It has of­fered loans to­talling $32 bil­lion to African na­tions in the past two years but there is con­cern that the con­ti­nent is not ben­e­fit­ing from de­vel­op­ing skills or tech­nol­ogy from the Asian eco­nomic gi­ant, de­spite its pledges to train thou­sands of African stu­dents and in­crease tech­nol­ogy trans­fer. — Reuters

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