Chinese loans prompt debt colonialism fear
China has pledged US$60 billion (NZ$90b) in new loans and investments in Africa, strengthening its grip on the continent in a show of financial firepower and strategic intent.
The package, announced by President Xi Jinping at a gathering of African leaders, includes loans, credit lines and direct investment as well as a commitment to write off some debt owed by the poorest nations.
China’s investment in Africa in the past decade has been prodigious and financing has more recently been accompanied by more troops; last year China opened its first overseas military base in Djibouti, east Africa.
The financial package includes US$20 billion in credit, US$15 billion in aid, interest-free loans and concessional loans, a US$10 billion fund for China-Africa development, US$10 billion in investments by Chinese companies and a US$5 billion fund for African imports. Xi also pledged to set up a security fund to provide military aid and support for intelligence and anti-terrorist efforts. China has been criticised for debt colonialism, making loans that it knows states cannot repay then using the debt as leverage to secure land or strategic infrastructure.
Chinese investments in Africa this century involve mining concessions and the building of ports, railways and roads. They have opened up natural resources including oil, diamonds and metals to power China’s industrial sector. They have also created markets for cheap Chinese manufactured goods, increased China’s global reach and cemented its
‘‘We will not interfere in Africa’s internal affairs and do not impose our will on Africa,’’ Xi Jinping, China president
position as a superpower.
Xi announced the money at the opening of the third Forum on China-Africa Cooperation in Beijing, attended by all 54 nations on the continent except Swaziland, the last still to recognise Taiwan and with which China has no diplomatic relations.
In 2015 Xi also pledged US$60 billion, which he says has been honoured. It has been spent on projects such as a US$4 billion train line from Nairobi to Mombasa on the Kenyan coast, a hydroelectric project in Ethiopia, cobalt and copper mines in the Congo, uranium from Namibia, diamonds from Zimbabwe, a port in Cameroon and the construction of a new administrative capital for Egypt. The forum is Beijing’s most public wooing of African leaders. When it began 18 years ago trade between Africa and China was worth US$10 billion a year. It is now more than US$220 billion. About a million Chinese citizens live and work in Africa.
Since 2000 China has extended US$136 billion in loans to African governments and it now does three times more trade on the continent than the US. It may soon overtake the US as Africa’s primary aid donor after President Donald Trump called for donations to be cut by 35 per cent to about US$5.4 billion.
Beijing says that it is working to a different model from Western powers and dismisses criticism that its spending amounts to colonialism or a debt trap. ‘‘China’s co-operation with Africa is clearly targeted at the major bottlenecks to development,’’ Xi said. ‘‘Resources for our cooperation are not to be spent on any vanity projects but in places where they count the most.’’
He touted China’s nostrings approach to investment, which western nations have sometimes linked to human rights or democracy. ‘‘We will not interfere in Africa’s internal affairs and do not impose our will on Africa,’’ Xi said.