China’s President Xi Jinping invited over 50 leaders from Africa in a Beijing summit.
More than 50 African leaders visited China’s President Xi Jinping in Beijing last week, joining a summit on debt restructuring in the world’s poorest continent. Most of the visiting countries were members of China’s Belt and Road Initiative (BRI), a global industrial and trade project centered on Beijing.
As part of the BRI, China financed billions of dollars in highways, railroads, ports, and other crucial infrastructure across the African continent. The goal was to increase Chinese influence in the resource-rich continent, outdoing competitors in Europe and North America, especially the United States.
Africa has long been divided between the influence of great powers. Several sub-Saharan African countries experience unacceptable levels of poverty and political instability, often worsened by bloody local conflicts.
The BRI also increased African trade with China, mostly related to raw materials and small manufacturing goods. At the 2021 Forum for Africa-China Cooperation, Beijing pledged to reach $300 billion in trade from Africa by the end of 2024. According to Reuters, the goal has already been reached at $306 billion in total so far.
However, after reaching its peak in 2016, Chinese investments in Africa slowly declined. China itself is undergoing a significant period of economic downturn, with many thinking its meteoric growth might have stopped.
Harvesting debt
Chinese loans to African countries came with systems of repayment often unsustainable. In some cases, the interest on these loans was so massive the original projects had to be canceled.
In Kenya, for example, the construction of a railroad connecting the coast to Uganda was stopped. Two-thirds of Kenya’s budget goes to offshore interest, mostly to China. The budget deficit led the Kenyan government to increase taxes, causing severe popular turmoil. The United States, taking advantage of the situation, is deepening ties with Kenya trying to remove it from China’s sphere of influence.
Over 40% of the Republic of Congo’s external debt is owned by China, the biggest percentage in the continent.
According to the African Development Bank, over $100 billion is needed to finance China’s ongoing projects in the continent. “While the maintenance of strategic relationships in Africa is key to China’s long-term objectives, risk mitigation is necessitated by Africa’s debt challenges,” said Boston University’s Global Development Policy Centre.
Instead of pardoning the debt, Beijing is postponing its deadlines. Many economists call this strategy a “debt trap” to force African countries into Beijing’s lap.
But without any tangible results, the BRI in Africa seems to have reached its operational end.
