African countries could sink deeper as Beijing forgoes loans
Beijing has announced plans to waive 23 interest-free loans for 17 African countries that matured at the end of 2021. Chinese citizens reacted with unprecedented rebukes online, while an analyst warned of the trap behind the largesse Chinese Communist Party (CCP) apparel.
On Aug. 18, Foreign Minister Wang Yi delivered Beijing’s decision during the Forum on China-Africa Cooperation (FOCAC) video conference.
Wang said it was a concrete action by the regime to implement and advance the “high-quality Belt and Road cooperation.”
However, the Chinese people rejected this claim. An analyst also suspected that the decision would only push African countries further into dire economic situations.
Although the exact amount of debt to be written off is not known, a Chinese online report indicates that China’s total lending to Africa stood at $145 billion at the end of 2020.
Beijing’s latest move has drawn widespread criticism on Chinese social media.
One person wrote: “Traitors are the real national thieves!
Another said: “Spending trillions of RMB for African brothers to support ‘one China’; it is the style of a great country.
“Can ordinary Chinese also waive their debts? asked one netizen.
“A bunch of lazy villagers borrowed money from my mother again and again… I owed my mother 300 yuan for Wi-Fi, but she immediately threw me into a dark cell!” I suspect she’s not really my mom,” another post read.
Since the founding of the People’s Republic of China (PRC), the CCP has used foreign aid to praise its diplomatic recognition even when the nation was in a 3-year famine.
However, this time he is really putting himself “against the wishes of the 1.4 billion people”, as one netizen commented.
Mr. Chen (alias), a resident of Shanghai, explained that there is widespread public disapproval of the CCP’s foreign policy.
He said: ‘It’s wrong to keep doing this. The country is suffering heavy economic losses due to the pandemic, now there is a shortage of power generation in the Three Gorges Dam, even the Shanghai automobile manufacturing plant has to suspend production for a week… where is the money? … It was interest free loans, now it’s all wiped out, … Plus the many unfinished projects of the Belt and Road Initiative (BRI); people have very bad feelings about it.
Economist Davy Jun Huang explained that the CCP had timed the lifting of the loans according to its objective, which was to obtain diplomatic support from African countries.
According to a Chinese media report, Malawian Ambassador to China Allan Joseph Chintedza welcomed Beijing’s decision and said all conference attendees reiterated their support for the one-China policy.
The One China Policy is the CCP’s position on the sovereignty of the PRC as China, and insists that it includes Taiwan.
Huang believes the CCP’s geopolitical competition – the power of speech in West Africa – with the West, was also part of the reason for the diplomatic move.
In June, G7 leaders pledged to raise $600 billion over five years to fund needed infrastructure in developing countries. Last year, the European Union announced plans to invest 300 billion euros (about $299.9 billion) over six years in global infrastructure. The two companies are seen as rivals to China’s BRI.
China’s BRI, a global infrastructure plan, is notorious for devastating developing countries with crippling debts as well as unsustainable infrastructure and unfinished projects.
In August, when US Secretary of State Antony Blinken visited South Africa, the White House also released the “US Strategy for Sub-Saharan Africa” (pdf) – a promise to deliver democratic and security dividends . “This strategy sets out four goals to advance U.S. priorities in concert with regional partners in sub-Saharan Africa over the next five years.”
The statement said the CCP “views the region as an important arena for… advancing its own narrow commercial and geopolitical interests… and weakening US relations with African peoples and governments.”
CCP Foreign Ministry spokesperson Wang Wenbin objected to the US statement, saying no one should “disparage and smear China-Africa cooperation.”
Deeper in the mud
Huang explained that the CCP planned its loan strategy. In the CCP’s debt trap diplomacy, there are predatory measures such as access rights to local mines, power plants, ports, etc., which are counted in the economic aspects of a loan.
There are also the political aspects of the loan. “When signing the agreement, there are various proportions of low-interest loans and interest-free loans; and interest-free loans are mainly designed for political needs,” Huang said.
Huang predicts that new forms of debt will accompany any loan forgiveness.
He said there will be undisclosed trade talks which will only aggravate the dire situation of these African countries.
Huang revealed the purpose of the BRI according to a CCP insider: The BRI was a carefully calculated conspiracy, not the superficial net gain and loss on the books. “The CCP will not allow partner countries to achieve real prosperity,” Huang said.
To make an analogy, the BRI is like having an elephant plowing the field. As the animal walks on the earth, it compacts it more. In other words, the elephants will only make the field more difficult to plant and thus lead to lower crop yield, he said.
After CCP debt relief, these African partner countries are likely to become more financially dependent on the CCP.
“Finances will collapse, … and they will only get poorer,” Huang said.
Lin Cenxin and Yi Ru contributed to this report.