Africa to renegotiate China debt at summit
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