China-Africa relations enter new era as easy money dries up
As the Chinese authorities scrambled to respond to Beijing’s first coronavirus outbreak in 50 days in mid-June, locking down residential compounds and sealing off a seafood market after at least 200 fell ill, an unruffled President Xi Jinping broadcast to African leaders to express solidarity in their own fight against the virus.
Appearing before a row of African flags on 17 June, Xi lavished praise on the joint efforts of his African partners and deployed military metaphors to promise that Covid-19 will strengthen China’s economic and diplomatic ties with the continent.
“China and Africa have offered mutual support and fought shoulder to shoulder with each other. China shall always remember the invaluable support Africa gave us at the height of our battle with the coronavirus. In return, when Africa was struck by the virus, China was the first to rush in with assistance and has since stood firm with the African people... No matter how the international landscape may evolve, China shall never waver in its determination to pursue greater solidarity and cooperation with Africa.”
While Xi’s speech offered a reassuring dose of rhetoric for his African audience, it was also peppered with policy announcements. He promised that China will extend debt support to distressed African partners by cancelling interest-free loans that are due to mature by the end of 2020, pledged to work with the G20’s Debt Service Suspension Initiative for the poorest countries and urged state-owned banks to show flexibility with their loans.
That offer was a recognition that the Covid-19 pandemic and the extraordinary global economic fallout it has wrought offer the most significant challenge yet to the health and stability of a China-Africa relationship bathed in warm words but underpinned by billions of dollars in investment and loans.
The pandemic has decimated Africa’s fragile economic assumptions, sapped Chinese demand for the commodities that support its leading economies, and forced the implementation of growth-eroding lockdowns. The World Bank predicts that GDP growth in sub-Saharan Africa could fall from 2.4% in 2019 to between -2.1% and -5.1% in 2020. That is causing African policymakers to cast a nervous eye towards the continent’s debt pile, swollen by hundreds of billions of dollars in loans from the Chinese government, banks, and state-owned enterprises. Without debt support, unaffordable payments on the vast
Xi promised that China will extend debt support to distressed African partners by cancelling interest-free loans due to mature by the end of 2020