Reuters: Siera Leone Telegraph: 9 September 2024:
China stopped short of providing the debt relief sought by many African countries last week, but pledged 360 billion yuan ($50.7 billion) over three years in credit lines and investments.
The Forum for China-Africa Cooperation (FOCAC) launched in 2000 took on an enhanced role after the 2013 inception of President Xi Jinping’s Belt and Road Initiative (BRI), which aims to recreate the ancient Silk Road for the world’s second largest economy and biggest bilateral lender to Africa.
“China is moving back on to the front foot in terms of overseas deployment of capital in the emerging markets,” said Tellimer’s Hasnain Malik, while adding it was not yet at pre-COVID levels.
China has also sought to use FOCAC to counter growing competition in Africa from the United States, the European Union, Japan and others.
In Beijing, diplomats and delegates from around the world mingled in the Great Hall of the People in Tiananmen Square as leaders from more than 50 African countries and Chinese officials led by Xi gathered for a group photo.
The new financial pledge is more than what Beijing promised at the last FOCAC in 2021, but below the $60 billion of 2015 and 2018, which marked the peak of lending to Africa under the Belt and Road Initiative.
During those peak years, Beijing bankrolled the construction of roads, railways and bridges. But a drying up of funds since 2019 has left Africa with stalled construction projects.
The new funds will go towards 30 infrastructure projects to improve trade links, China said, without giving details.
The 54-nation continent of more than 1 billion people has an annual infrastructure funding deficit estimated at $100 billion, and needs transport links to make a new giant pan-African trade bloc (AfCFTA) a reality.
Beijing has in recent years cut funding for such projects as it shifted focus to “small and beautiful” projects, mainly due to its own domestic economic pressures and an increase in debt risks among African countries.
Asked how the new commitments fit into China’s current cautious overseas lending strategy, a foreign ministry spokesperson said there was no contradiction.
“The cooperation between China and African countries, including the specific implementation of projects, is discussed and determined by both sides,” Mao Ning, a foreign ministry spokesperson told a regular news conference on Friday.
CURRENCY SWAPS
China also said it will launch 30 clean energy projects in Africa, offer co-operation on nuclear technology and tackle a power deficit that has delayed industrialisation efforts.
“The outcomes of the FOCAC summit signal an impetus for green projects and especially for renewable energy installations,” said Goolam Ballim, head of research at South Africa’s Standard Bank.
China has become a global leader in wind and solar energy, Ballim said, controlling significant supply chains and reducing production costs.
Others were sceptical.
“The issue is not so much about the size of the investments, it’s been about the lack of transparency around the terms of the debt,” said Trang Nguyen, global head of emerging markets credit strategy at French bank BNP Paribas.
Success was less clear-cut for countries owing a large share of their debt to China, which made no express offer of assistance to those struggling with repayments.
Beijing instead urged other creditors “to participate in the handling and restructuring of African countries’ debts under the principle of joint actions and fair burden-sharing”.
African leaders hoping to bask in large deals for their countries had to settle for less splashy announcements.
Ethiopia and Mauritius announced new currency swap lines with China’s central bank. Kenya said it made progress on talks to reopen the lending taps for key projects like its modern railway to link the region.
Still, there was optimism from some, as they welcomed China’s increased commitments to Africa’s security, humanitarian challenges and other non-financial affairs.
“After nearly 70 years of hard work, China-Africa relations are at their best in history,” Tanzania’s President Samia Suluhu said on her X account.
($1 = 7.0844 Chinese yuan renminbi)
South African President Cyril Ramaphosa said last Thursday that he did not believe Chinese investments in Africa were pushing the continent into a “debt trap” but were instead part of a mutually beneficial relationship, according to report by Reuters’ Joe Cash.
Ramaphosa made the remarks on the sidelines of a China-Africa summit in Beijing, where delegates from more than 50 African nations gathered this week.
“I don’t necessarily buy the notion that when China (invests), it is with an intention of, in the end, ensuring that those countries end up in a debt trap or in a debt crisis,” Ramaphosa said, when asked by reporters about China’s pledge at the summit of $51 billion in new funding for Africa.
In addition to the financial support over three years, China promised to carry out three times as many infrastructure projects across resource-rich Africa, which in recent years has become the focus of intense geopolitical competition between global powers like China, Europe and the United States.
Without providing details, Ramaphosa also said South Africa had reached agreement with China on aspects of its energy security. He said South Africa could learn from China on reforming its energy sector.
“They already have done exactly what we are seeking to do. So there are lessons for us to learn from China and how to do it,” he said.
South Africa has been plagued for years by rolling power blackouts that have constrained economic growth.
Ramaphosa also said South Africa would look to attract China’s electric vehicle manufacturers including its largest, BYD (002594.SZ), opens new tab.
“We had good exchanges with BYD, which has shown a great interest to come and invest in South Africa,” he said.
Source: Courtesy of Reuters Reporter – Joe Cash
Source: Courtesy of Reuters Reporters – Duncan Miriri, Laurie Chen, and Joe Cash
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