Facing debt repayment issues China shifts Africa financing focus from infrastructure to trade

(Global Trade Review, London, 15 December 2021) China’s commitments to financing in Africa are shifting away from giant infrastructure developments and towards developing stronger trade flows and commercial investments, analysts say. At the Forum on China-Africa Cooperation (Focac) in late November, the country unveiled an action plan that included around US$40bn of commitments in the form of trade finance, commercial investments and a share of China’s Special Drawing Rights (SDR). Although a hefty headline figure, it is significantly less than the US$60bn promised at the two most recent forums in 2015 and 2018. It also includes little in the way of concessional loans, which has been China’s primary tool for financing a swathe of infrastructure across the continent, including railways, airports, roads and energy projects. GTR reported in September that European export credit agencies and commercial lenders have been approached by Chinese contractors working on projects in Africa who have been unable to secure financing from Chinese sources. The Atlantic Monthly calls this "China's real 'debt trap' threat, claiming it "is part of a deepening debt crisis affecting countries that have borrowed hundreds of billions of dollars from China for infrastructure development... It’s not just low-income countries that are hard-pressed to repay China. Middle-income nations also are seeking to renegotiate their Chinese debts as the pandemic-induced global economic slowdown nears the two-year mark. But Chinese lenders are digging in their heels as governments ask for relief, especially with countries that don’t receive media attention. And those countries are feeling the pain. For example, Suriname’s inability to access IMF funds means less money for social programs at a time when the pandemic has increased demand for health care and other programs focused on the poor.