China declined writing off Africa debt but deal with it case by case

China President XI. PHOTO | CD

Africa leads in debts. China has a larger part of African debt than any other nation. There were plans to call China and write off the debt due to pandemic but China declined. 

China is Africa’s largest trading partner with over $200 billion in combined imports and exports annually.

China has also financed billions of dollars of infrastructure projects like roads, ports and railroads across the continent. 

But COVID-19 has taken a toll on the world economy, harming African countries’ ability to repay debt and decreasing China’s willingness to invest abroad. 

Observers are looking for signs as to how the China-Africa relationship will change in the wake of the virus.

 “The Chinese economy is taking a heavy hit from COVID-19,” said Yun Sun, the director of the China program at the Stimson Center, a Washington-based policy research centre. 

“That’s absolutely going to dampen the Chinese ability to disperse financing or continue to support infrastructure projects in developing countries including Africa, at a rate that did before.” 

 One of the biggest questions is the future of China’s numerous infrastructure projects including the massive Belt and Road Initiative.

 The Chinese government, banks and private investors lent about $146 billion to African countries between 2000 and 2017. 

Due to the global pandemic, many are calling for a pause in repayments or some form of debt forgiveness. 

 “It’s not just one African country who is so welcoming of this global gesture with this calling for global debt relief,” Sun said. 

“But I would say that the picture looks very different from the Chinese side. 

That, first of all, given the massive amount of debt that the African countries owe China, whether it is financially feasible for China to forgive those debts is a key question here.” 

 It is estimated that African countries owe a combined $44 billion to service debt this year. 

Global lenders including the International Monetary Fund, World Bank and private lenders from G-20 countries, including China, have agreed to pause debt service payments from 77 of the world’s poorest countries. 

 China has said it is open to further debt relief but prefers to negotiate terms on a one-on-one basis with individual countries.

 “The Chinese attitude towards that, to begin with, is quite resistant,” Sun said.

 “It doesn’t mean that China will not engage in, for example, debt renegotiation or debt restructuring or even postponement to owe for a longer grace period for the African countries to pay back their debt. But I think a blanket debt forgiveness is not in the cards.”