West Uses “Debt Trap” to Thwart Alliance of China & Africa for Economic Development

September 8, 2018

“The term “debtbook diplomacy”—with the meaning that China builds influence over other nations by deliberately causing them to take on more debt than they can handle—was coined in a report commissioned by (and custom designed for) the U.S. State Department and written in May 2018 by Sam Parker of the Harvard Kennedy School’s Belfer Center for Science and International Affairs. This report was then used by the U.S. State Department to ring alarm bells all over the world about the potential impact of China’s Belt and Road Initiative. But the report’s author, Sam Parker, is not known to have any expertise in economics or to have written anything about the economies of China or other developing countries.

“Historically, the British Empire was, and still is, the master of debt traps. Its methods have been copied in the post-1971, post-Bretton Woods era by such United States- and British-controlled institutions as the International Monetary Fund and World Bank to shackle nations with unpayable debt, in order to loot them, destroy their physical economic productive capabilities and finally force them to give up their national sovereignty. Under the 19th century, British-dominated, imperialist world order, as in the case of the post Bretton Woods system, money is treated as a “global” commodity controlled by private interests, rather than a political tool controlled by sovereign governments which issuance is intended to promote the productivity of society and the general welfare of its citizens.”` (Schiller Institute’s “Why China’s Debtbook Diplomacy is a Hoax”)

African Development Bank President, Adesina, Denies Debt Crisis in Africa

Speaking to the reporters on the sidelines of the Forum on China-Africa Cooperation (FOCAC) Beijing Summit on Sept 5, and addressing the western propaganda that China is drowning Africa with debt, President of the African Development Bank (AfDB), Dr. Akinwumi Adesina, said: “Let me be very clear that Africa has absolutely no debt crisis; African countries are desperate for infrastructure.” “The population is rising, urbanization is there, and fiscal space is very small,” the AfDB president added. “They are taking on a lot more debt, but in the right way,” Adesina said, Xinhua reported on Sept 5.

Scoffing at the international campaign that the China imposed debt has begun to cripple Africa, Adesina pointed out that Africa’s overall debt-to-GDP went up from 22 percent in 2010 to 37 per cent last year. He stressed that the ratio is markedly lower than the 100 per cent or 150 per cent of many higher-income countries, and over 50 per cent among emerging economies.

Meanwhile, in an interview with the Nikkei of Japan, the foreign minister of Djibouti, Mahmoud Ali Youssouf, said his country intends to help promote China’s Belt and Road Initiative, but is also cautious about over reliance on China in light of Djibouti’s growing debts linked to Chinese investment. “If [the initiative] brings wealth, progress, development, we welcome it,” he said in that interview, Nikkei reported today

Nigerian President Buhari Debunks the “Debt Trap” Hoax

Muhammadu Buhari, the President of Afria’s most populous nation, Nigeria, has emerged from the hugely successful Forum on China-African Cooperation (FOCAC) with a refutation of what he called “insinuations about a so-called Chinese debt trap.”

“Let me use this opportunity to address and dispel insinuations about a so-called Chinese debt trap,” he told the press today. “These vital infrastructure projects being funded are perfectly in line with Nigeria’s Economic Recovery & Growth Plan. Some of the debts, it must be  noted, are self-liquidating. Nigeria is fully able to repay all the loans as and when due, in keeping with our policy of fiscal prudence and sound housekeeping.”

He said: “I am happy to note that Nigeria’s partnership with China through FOCAC has resulted in the execution of critical infrastructure projects valued at more than $5 billion, over the last three years. We have completed West Africa’s first urban rail system, valued at $500 million, in Abuja. Before then was the 180km rail line that connects Abuja and Kaduna, completed and commissioned in 2016, and running efficiently since then,” the President declared.

He said that Nigeria is currently leveraging Chinese funding to execute $3.4 billion worth of projects at various stages of completion. Among these are: upgrading of airport terminals, the Lagos-Kano rail line, the Zungeru hydroelectric power project, and fibre cables for our internet infrastructure. Nigeria signed an agreement for an additional $1 billion loan from China. The money is for additional rolling stock for the newly constructed rail lines, as well as road rehabilitation and water supply projects.

“Debt Trap” Hoax Exposed by Chinese Spokesperson

At a September 4 press conference on the morning of the second day of the FOCAC Summit, Xu Jinghu, the Special Representative of the Chinese Government on African Affairs, was asked by Reuters about whether the $60 billion financing that President Xi Jinping promised in aid for Africa in his keynote address, would create debt problems for Africa.

Xu Jinghu went through the importance of the eight areas outlined by President Xi in order to raise the level of production and productivity of the African economy.  She also made clear that all of the projects are done in close consultation with the African countries in order to meet what they see as their real needs for further industrialization.

She added that Africa is in “the ascending phase” of its development and “faces a gap in the funding for all of their endeavors…”They need capital development and the African and Chinese economy, which is more developed, are therefore complementary.”

Xu commented, “You have to take into consideration the international situation. The  costs of financing for development on the international market has become very expensive and most of the African countries are still dependent on exporting their raw materials. And the price of these have fallen,which has increased the debt of African countries a great deal.  And if you look at the African countries, you will see that China is not the creditor of those African countries with the biggest debt burden.

China Africa Research Initiative Refutes “Death Trap” Propaganda

The China Africa Research Initiative-(CARI) at the Johns Hopkins School of International Studies, Washington DC refuted the “death-trap” narrative that China is subverting African nations by forcing them into debt.  Their The Path Ahead: The 7th Forum on China Africa Cooperation-(Briefing Paper #1, 2018), reports: “Finally, in just three African countries, Chinese loans are currently the most significant contributor to high risk of/actual debt distress” They are;  Djibouti, Republic of Congo, and Zambia.  

Read complete CARI  briefing paper

 

Read:

Who Owns Africa’s Debt: China or Western Nations & Institutions?

 

FOCAC Summit: President Xi “China and Africa will walk together towards prosperity.”

{I have been telling my friends for years that China-Africa cooperation will change the African continent. With investments in vital categories of infrastructure, African nations can industrialize and develop advanced agro-manufacturing sectors. Economic sovereignty is now possible for African nations after 500 years of slavery and colonialism.

This recent FOCAC summit has placed Africa-China relations on center stage in front of the whole world. As Faki Mahamat, Chair of the African Union Commission said at the conference; China-Africa cooperation is a solid foundation for a new international order.(Watch the video of his remarks below)  

I will be writing more on the significance of the new era of China-Africa cooperation, but for now, we can and should rejoice. The world has changed for the better, even though there are dangerous pitfalls ahead. }

 

China To Invest $60 Billion in Africa over the Next Three Years; Xi Says: ‘Explore a New Path of International Relations’

Sept. 3, 2018

Chinese President Xi Jinping in his keynote of the Beijing Summit of the Forum on China-Africa Cooperation (FOCAC), announced that China would be investing $60 billion in Africa over the next three years, which would include $15 billion of interest-free and concessional loans, $20 billion of credit lines, a $10 billion special fund for development financing, a $5 billion special fund for financing imports from Africa, and encouraging investment by Chinese companies to the tune of $10 billion in Africa.

In his speech, President Xi said that China-Africa cooperation was based on the following principles;  The Five “No’s”:

No interference in African countries and pursuit of development paths that fit their national conditions;

No interference in African countries’ internal affairs;

No imposition of China’s will on African countries;

No attachment of political strings to assistance to Africa;

No seeking of selfish political gains in investment and financing cooperation with Africa.

“We welcome Africa to the fast train of Chinese development,” Xi said. Central to the cooperation has been the Belt and Road Initiative, which in Africa is in synergy with the African Union’s “Agenda 2063,” which marks the centennial of the official end of colonialism in Africa in 1963.

President Xi laid out the eight major initiatives that China would implement in collaboration with Africa in the coming three years:

1. In industrial promotion, China will set up a China-Africa trade expo in China in order to encourage Chinese investment in Africa.
2. It will also carry out 50 agricultural assistance programs, provide $147 million in food aid to African countries affected by natural disasters and send 500 agricultural experts to Africa.
3. With regard to infrastructure, China together with the African Union will formulate a China-Africa infrastructure cooperation program.
4. With regard to trade, China will increase its imports from Africa, in particular non-resources products.
5. On green development, China will undertake 50 projects focusing on climate change, ocean, desertification prevention and control, and wildlife protection.
6. On capacity building, China will set up 10 workshops in Africa to offer vocational training for young Africans. It will also train 1,000 high-caliber Africans for training in innovation sectors; provide Africa with 50,000 government scholarships; and sponsor seminar and workshop opportunities for 50,000 Africans and invite 2,000 African students to visit China for exchanges.
7. In health care, China will upgrade 50 medical and health aid programs for Africa. On people-to-people exchanges, China will set up an institute of African studies and enhance exchanges with Africa on civilization.
8. And on peace and security, China will set up a China-Africa peace and security fund and continue providing free military aid to the African Union and will support countries in the Sahel region, and those bordering the Gulf of Aden and the Gulf of Guinea, in upholding security and combating terrorism in their regions.

African Union’s Moussa Faki Mahamat, Addresses FOCAC Conference

Please review this excellent speech by Faki Mahamat, Chair of the African Union Commission, at the Forum on China-Africa Cooperation. In his remarks the AU Chair called forthe urgent reform of the international financial institutions…That China-Africa cooperation is a solid foundation for a new international order…Our partnership [with China] can reshape the world’s geo-political landscape”He went onto say that the AU welcomes the Belt and Road Initiative and its synergy with AU’s “Agenda 2063.”

 

Presidents Ramaphosa and Kegame: Africa Supports the Belt and Road Initiative

In his speech to the FOCAC Summit, South African President Cyril Ramaphosa said, the Belt and Road Initiative was in the interests of the African nations. China-Africa cooperation, he said, was in the interests of the African nations. “In the values that it promotes, in the manner that it operates, and in the impact that it has on African countries. FOCAC refutes the view that a new colonialism is taking hold in Africa, as our detractors would have us believe...It is premised on the African Union’s Agenda 2063, a vision that has been crafted in Africa, by Africans. It is a vision of an integrated, prosperous and peaceful Africa, driven by its own citizens and representing a dynamic force in the international arena.”

“Why do we support the Belt and Road Initiative?” Ramaphosa asked. “Because we are confident that this initiative, which effectively complements the work of FOCAC, will reduce the costs and increase the volume of trade between Africa and China. It will encourage the development of Africa’s infrastructure, a critical requirement for meaningful regional and continental integration.”

Ramaphosa was followed by Rwandan President Paul Kagame, the current rotating chairman of the African Union. “Africa wishes to be a full and integral part of the Belt and Road Initiative. The gains will be enjoyed by everyone.” Kagame praised in particular the personal commitment of President Xi to this initiative. “He has visited every region of our continent, including my country Rwanda. China has proven to be a win-win partner and dear friend,” Kagame said. UN Secretary General Antonio Guterres gave support to the message expressed by the African leaders, who said that “it is vital that current and future development cooperation contributes to peace, security and to building a ‘community of shared future for mankind,'” reiterating a concept that lies at the basis of President Xi’s conception of a new form of international relations. Guterres also expressed support for the importance of the strengthening South-South cooperation.