Africa looks to renegotiate loan repayments to China

The continent will also seek to attract more Chinese investment during summit this week

JOHANNESBURG • Some African countries may seek to renegotiate repayment of existing debts to China as a way of helping their economies hit by lower crude and commodity prices, but will not turn down offers of new loans by the Asian giant at a summit this week.

The Forum on China-Africa Cooperation, to be held in Johannesburg on Thursday and Friday, will be attended by several African heads of state and Chinese President Xi Jinping.

Mr Xi will visit Zimbabwe tomorrow and Wednesday, and South Africa on Wednesday and Thursday, before co-chairing the conference in Africa's most industrialised economy.

During the summit, African countries will seek more Chinese investment in factories manufacturing goods for export, in addition to roads and railways on a continent long seen as a major commodities and energy source for China.

Chinese state-owned firms in Africa face criticism for using Chinese labour to build government-funded projects like roads and hospitals, while pumping out resources and leaving little for local economies, an image Beijing wants to change at the forum.

Experts are confidently expecting China to push ahead with new loan and trade proposals for the continent despite its own slowing economy.

"Key themes for Africa will be Africa's growing debt to China and how China's domestic stimulus can re-ignite commodity demand to help pay off the loans and industrialisation of the continent," said Mr Martyn Davies, managing director for emerging markets & Africa at Deloitte.

"Real development is driven not by another US$10 billion (S$14 billion) loan pledge, but by African economies institutionalising intellectual property and not just investment in mines and roads."

China is Africa's largest trading partner and the trade volume between them amounted to US$220 billion last year, according to China state news agency Xinhua.

Its investments in Africa amounted to US$32.4 billion at the end of last year, according to London-based BMI Research. It has offered loans totalling US$32 billion to African nations in the past two years, but there is concern that the continent is not benefiting from developing skills or technology from China, despite its pledges to train thousands of African students.

Mr Zhang Ming, a Chinese vice-foreign minister, said last week that Beijing would continue to provide support and loans to the continent.

Africans broadly see China as a healthy counter-balance to Western influence though Western governments charge China of turning a blind eye to conflicts and rights abuses on the continent as they pursue trade and aid policies there.

REUTERS

A version of this article appeared in the print edition of The Straits Times on November 30, 2015, with the headline 'Africa looks to renegotiate loan repayments to China'. Print Edition | Subscribe