Chinese loans to African governments plunged by more than three-quarters in the first year of the pandemic compared to the year before, researchers have found, with new loan commitments in 2020 at their lowest level in 16 years.
That could be due to Chinese lenders taking more precautions at the outset of the pandemic and focusing on domestic priorities, as well as African countries being less willing to borrow, the study by Boston University’s Global Development Policy Center found.
Chinese lending in 2020 fell to $1.9 billion, the study released this week showed, with only 11 new loan commitments recorded. That’s compared to the 32 loans signed in 2019 worth some $8.2 billion.
“As the pandemic continues to wreak havoc on livelihoods within China and the debt position of some African countries, shifts in financing types and sources are expected for future Chinese financing to Africa,” the report said.
China is sub-Saharan Africa’s biggest single creditor and, in the two decades since 2000, has signed 1,188 loans worth $160 billion with 49 African governments, state-owned enterprises and regional organizations.
Despite the downturn, Oyintarelado Moses, one of the study’s authors, told VOA that Chinese loans to Africa would likely pick up in the post-pandemic period “as other sources of financing beyond lending from traditional borrowers increase.”
The biggest borrowers have been Angola, Ethiopia and Zambia. The latter became the first pandemic-era default in 2020, with debt of almost $32 billion. According to the Reuters news agency, $5.78 billion of that debt was held by China and Chinese entities. China committed last week to joining Zambia’s creditor committee, a move welcomed by the International Monetary Fund.
China has long been accused of “debt-trap diplomacy” in which its massive loans to developing countries are said to leave them dependent on their creditor for support. Beijing strongly refutes these accusations, saying the West simply resents China’s close ties with Africa because of its Belt and Road Initiative — which is China leader Xi Jinping’s global infrastructure development plan.
A January op-ed in China’s state media, the Global Times, criticized reports in Western media that Beijing was slowing lending to countries on the continent, saying, “Whether China accelerates or slows its lending to Africa, the West is ready to criticize China with their well-worn ‘debt trap’ story.
“In fact,” the op-ed continued, “not one developing country has fallen into the so-called debt trap due to Chinese loans.”
On his visit to several African states last year, U.S. Secretary of State Antony Blinken said countries should not be left with a “tremendous debt that they cannot repay.”
Source: Voice of America