China’s loan waiver to African countries last month represents 1.1% or even less of Chinese lending to the countries, according to a study.
China had waived 23 interest-free loans to 17 African countries that had already matured in 2021. These loans had 10-30-year maturity that were worth $610 million in all, estimated by the researchers at Boston University. They estimated the amount using a database of Chinese state lending.
The move suggests China’s objective for the continent to believe the Asian superior its biggest development partner for a long time. This is a much-needed move for China amidst “the ongoing many hegemonic and bullying practices”, said Wang Yi, China’s foreign minister. The statement can be an indirect reference to the recent visit by US House of Representatives speaker Nancy Pelosi to Taiwan even when US faced a lot of opposition from China.
This is not the first time China is giving loan relief to Africa. Africa’s largest bilateral lender has waived loans since 2000 when it cancelled loans made in the 1980s and 1990s. According to analysts, China’s stance on lending to developing nations under its Belt and Road Initiative (BRI) are much stricter.
According to the Boston University database, which monitors loans issued since 2000, Chinese state-owned lenders committed $53.8 billion in loans to Africa between 2000 and 2012. The debts annulled last month represented a minuscule part of this total.
According to the paper by Jyhjong Hwang and Oyintarelado Moses, “(Interest-Free Loan) Provision and Cancellation are Important Diplomatic and Symbolic Tools in China’s Lending Practices.”
The loans, they continued, “are more analogous to instruments of foreign policy than financial instruments focused on bottom lines.”
According to scholars and African government officials, interest-free loans from China to Africa, which have funded government structures, stadiums, and hospitals, are typically viewed like grants.
