China Xi Jinping promises to write off some of Africa’s debt

“The world is undergoing a great change that has not been seen in a century,” Xi said. “Given the new opportunities and challenges we face, closer cooperation between China and Africa is needed more than ever.”

A small portion of African debt

The Chinese leader also promised that his country would offer “greater support” to African countries which had been hit hardest by the virus or under financial pressure. He suggested that China could give the country more time to pay off other debts, for example.

Xi’s announcement came as the coronavirus pandemic caused great difficulties in some of the most backward countries in the world, including in Africa – and pressure was building creditors to intervene. The International Monetary Fund and the World Bank, for example, have asked creditors to postpone debt payments from Africa as a way to support some of the continent’s poorest countries as they wrestle with the effects of the plague.

But analysts have pointed out that interest-free loans comprise only a small portion of the debt of African countries that owe to China. The SEARCH report sets a total of under 5%.

In the early 2000s, such arrangements “formed a significant percentage of Chinese loans,” the report said. “However, when other sources of financing from China began to increase … [interest-free loans] into smaller and smaller proportions of total Chinese loans to Africa. “

Canceling African debt is also nothing new for China. China canceled at least $ 3.4 billion of African debt from 2000 and 2019, according to SEARCH – mostly in interest-free foreign aid loans that have defaulted.

But “most” loans are Chinese Recent expansion into Africa – including soft and commercial loans – has never been considered for cancellation, the report added.

Important allies

Xi’s announcement may be more about politics than about forgiving a large amount of debt. The President has entered the last few weeks have made the preservation of the country’s diplomatic relations in Africa a major foreign policy strategy, as it has faced it a backlash among several Western democracies over the handling of the coronavirus pandemic.

Relations between China and Africa have not been completely smooth. In April, Africans in the southern city of Guangzhou told CNN that they had been driven from their homes by landlords and turned away from hotels when Chinese warnings of imported corona virus cases fueled anti-foreign sentiment. Chinese officials said at the time that the country “had no tolerance for words and discriminatory actions,” and that “China and African countries always support each other and always fight the virus together.”

Economic challenges

And the decision to forgive debt comes at a challenging time for the Chinese economy, which shrank earlier this year for the first time in decades.

Even so, Xi said that strengthening the Belt and Road Initiative was important after the pandemic, and he stressed that China and Africa shared “longstanding friendships.”

“No matter how the international landscape can develop, China will never waver in its determination to pursue greater solidarity and cooperation with Africa,” Xi said, adding that Beijing would continue to supply medical supplies to African countries, helping them build homes sick and even made it possible for some countries to be among the first recipients of the Covid-19 vaccine, if China had done it.

– Jenni Marsh contributed to this report.