By Duncan Miriri and Laurie Chen
NAIROBI/BEIJING (Reuters) – China stopped short of providing debt relief sought by many African countries this week but pledged 360 billion yuan ($50.7 billion) over three years in credit lines and investments.
The Forum on China-Africa Cooperation (FOCAC), established in 2000, took on a larger role following the 2013 launch of President Xi Jinping's Belt and Road Initiative (BRI), which aims to recreate the ancient Silk Road for the world's second-largest economy and Africa's largest bilateral lender.
“China is taking the lead again in terms of overseas capital deployment in emerging markets,” said Tellimer's Hasnain Malik, though he added that it was not yet at pre-COVID levels.
China has also sought to use FOCAC to counter growing competition in Africa from the United States, the European Union, Japan and others.
In Beijing, diplomats and delegates from around the world gathered in the Great Hall of the People on Tiananmen Square while leaders from more than 50 African countries and Chinese officials led by Xi gathered for a group photo.
The new financial pledge is larger than what Beijing promised at the last FOCAC in 2021, but smaller than the $60 billion in 2015 and 2018, which marked the peak of lending to Africa under the Belt and Road Initiative.
During those boom years, Beijing funded the construction of roads, railways and bridges, but a funding shortage since 2019 has left Africa with stalled construction projects.
The new funds will go toward 30 infrastructure projects to improve trade ties, China said, without giving details.
The continent of 54 nations and more than 1 billion people has an estimated annual infrastructure funding gap of $100 billion, and needs transport links to make a giant new pan-African trade bloc (AfCFTA) a reality.
In recent years, Beijing has cut funding for such projects, focusing on “small and nice” projects, mainly due to its own domestic economic pressures and a rise in debt risks among African countries.
Asked how the new commitments fit into China's current cautious overseas lending strategy, a Foreign Ministry spokesman said there was no contradiction.
“Cooperation between China and African countries, including the specific implementation of projects, is discussed and determined by both sides,” Foreign Ministry spokesperson Mao Ning said at a regular press conference on Friday.
CURRENCY SWAPS
China also said it will launch 30 clean energy projects in Africa, offer cooperation in nuclear technology and address an energy deficit that has held back industrialization efforts.
“The FOCAC summit results provide a boost for green projects and especially renewable energy installations,” said Goolam Ballim, head of research at Standard Bank of South Africa.
China has become a world leader in wind and solar energy, Ballim said, controlling important supply chains and reducing production costs.
Others were skeptical.
“The problem is not so much the size of the investments, but the lack of transparency around the terms of the debt,” said Trang Nguyen, global head of emerging markets credit strategy at French bank BNP Paribas (OTC:).
Success was less clear for countries that owed a large portion of their debt to China, which made no explicit offer of help to those struggling to repay it.
Instead, Beijing urged other creditors to “participate in the management and restructuring of African countries' debts under the principle of joint actions and fair burden sharing.”
African leaders hoping to secure big deals for their countries had to settle for less flashy announcements.
Ethiopia and Mauritius announced new currency swap lines with China's central bank. Kenya said it had made progress in talks to reopen credit lines for key projects such as its modern railway linking the region.
Still, there was optimism on the part of some, who welcomed China's increased engagement with Africa's security, humanitarian challenges and other non-financial issues.
“After nearly 70 years of hard work, China-Africa relations are at their best in history,” Tanzanian President Samia Suluhu said on her x account.
(1 dollar = 7.0844 renminbi)
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