In the course of the development of China-Africa relations, whenever the Forum on China-Africa Cooperation (FOCAC) holds a summit or a ministerial meeting, or when Chinese leader visits Africa, the US and Western media always publish negative public opinion with a sour smell of "envy, jealousy, and hatred" or a lingering "Cold War mentality" and tirelessly repeat the clichés of China's "resource plunder", "neocolonialism" and "debt trap" in Africa. In particular, the so-called "China debt trap" theory is an attempt to discredit the construction of the "Belt and Road" and shift the root cause of the current financial crisis and even the food and fuel crisis facing Africa to China.
In fact, the so-called Chinese debt trap is not only a false proposition but also a cliche that is trumpeted from time to time. As early as 2007, at the G8 finance ministers meeting, which set the tone for what was then a summit of the G8 (a group that also included Russia), the German finance minister warned that Chinese aid and loans to Africa dealt a blow to the Western creditors’ debt-reduction efforts, might trigger a new round of African debt crisis and were "irresponsible". The Chinese had no idea that the zombie rhetoric about Chinese "new colonialism" and the "debt trap" would still haunt China-Africa cooperation almost 20 years later.
First, the data easily reveal the fallacy. Chinese aid and loans to Africa are much smaller than what has been provided by the West, in both size and share, which gives China fairly small influence or weight in addressing the overall debt crisis in Africa. A further look into the formation of the debt problem, China’s efforts to help address it, the actual effect of Chinese aid and loans and the welcome attitude of African countries in general toward Chinese investment and aid makes it difficult to jump to the conclusion that China has been irresponsible in aiding Africa or laid a debt trap. On the contrary, increased aid, investment, economic cooperation and trade from China have in the past more than 20 years played a positive role in promoting economic development on the continent. China’s investment and financing cooperation with Africa has been a treasure that boosted African development, not a trap.
Africa’s debt problem has a long history. The huge foreign debt of over trillion dollars now has become a formidable bottleneck restricting Africa’s economic development. As a matter of fact, the West owes much to its formulation. In the 1960s and 1970s, most African countries wanted money in the early stage of industrialization and took on massive foreign debt from Western countries and financial institutions under Western control.
However, as the prices of primary products dropped on the international market and Western countries set up trade barriers, the terms of export worsened significantly for Africa, leading to balance of payments disequilibrium and decreased solvency. Consequently, they had to incur new debts to repay old ones, which, coupled with high interest rates, resulted in a snowballing of foreign debt. The total foreign debt of African countries rose rapidly from $8 billion to $174 billion from 1970 to 1987.
According to the World Bank, of the total foreign debt of over trillion dollars of 49 African countries with available data, three-fourths is owed to multilateral financial institutions and private financial institutions (excluding China). A report released by British charity Debt Justice showed that 35 percent of African countries’ foreign debt came from Western private lenders, nearly triple China’s loans to Africa and with an average interest rate about double that of Chinese loans. Tim Jones, head of policy at Debt Justice, noted that Western countries blaming China for creating the African debt crisis was a deliberate distraction and that Western multilateral and private lenders remained the largest creditors.
Second, not only are the size and share of China’s credit small compared with that of Western creditors and other international financial institutions but Chinese investment and financing have mainly been used for infrastructure construction and productive sectors, greatly improving the self-restorative capacity of African countries.
Take the Mombasa-Nairobi railway in Kenya as an example. At a cost of $3.8 billion and operating for 7 years, the railway service has created 74,000 jobs for Kenyans and contributes 1.5 percent to the country’s GDP growth every year. By the end of May 2024, the Mombasa-Nairobi Railway has operated an average of 13.3 freight trains per day, transporting a total of 2.684 million TEUs, sending 32.867 million tons of cargo, 6.4 passenger trains per day, and sending a total of 12.869 million passengers. The operation of the railway not only promotes the economic and trade exchanges between Kenya and other East African countries, increases the transportation capacity of the entire East African countries, effectively promotes the interconnection and integration of the East African region, but also improves people's transportation convenience and living standards, so it is called the "road of happiness" by the local people.
That’s why Kenyan former President Uhuru Kenyatta has repeatedly said in Western media interviews that borrowing is not terrible. What is — and what really worries him — is using debt to pay running expenses such as wages and utilities. In his words, Kenya has borrowed money to invest in development and to close the infrastructure gap. These are future-oriented investments that will improve Kenya’s investment environment and business development, bring job opportunities to the younger generation and lay the foundation of industrialization.
In short, it is certainly the African countries themselves that have a right to say whether China’s investment and financing cooperation with Africa is a "development treasure" or a "debt trap".
About the author:
HE Wenping, Senior Research Fellow of China-Africa Institute.