•Far from expanding China’s global power, case studies have instead shown that heavily-indebted recipients of Chinese loans are actually a huge liability for China.
•Ironically, there is little mention of the Paris Club which includes countries from North America and Europe which lend to developing countries.
One of the accusations made by adversaries of the ever growing Sino-Africa relations is that China has placed the continent in an economic cul-de-sac through the so called debt trap.
It is a very well choreographed message that is aimed at creating a rift between the two partners in order to keep Africa in a vicious cycle of poverty and perennially in a dependency syndrome.
‘Debt-trap diplomacy’ is a theory to describe a powerful lending country or institution seeking to saddle a borrowing nation with enormous debt so as to exert undue influence over it.
The term was introduced by Indian academic Brahma Chellaney in early 2017 and has been widely used in recent years to allege China's lending policies, though the factuality of the allegations against China has been criticised by multiple top academic institutions, which have stated that the narrative of debt-trap diplomacy in the context of Chinese investments is false.
Proponents of ‘debt-trap diplomacy’ theory have claimed that China’s geostrategic interests are served when its partners struggle with debt. The resulting economic crises supposedly would allow Beijing to exploit and seize assets and helps its political influence. But evidence so far contradicts the theory.
PRESIDENT PAUL KAGAME
There is much talk of China’s debt in African countries but little mention of the Paris Club which includes countries from North America and Europe which lend to developing countries.
Far from expanding China’s global power, case studies have instead shown that heavily-indebted recipients of Chinese loans are actually a huge liability for China. The country has lent billions of dollars to African countries for roads, railways, ports and other major infrastructure projects.
For at least the two decades that China and Africa have been partners and friends, Africa has registered massive growth than it ever did before with the West. This has been as a result of the infrastructural projects that China has put up in numerous African countries, which have led to both intra- and inter-country.
The two partners have also engaged through mutually beneficial engagements that promote investment and develop Africa’s industrial capacity.
To remove any lingering doubts on the debt-trap issue, Rwanda President Paul Kagame recently talked on a number of issues regarding China engagement with Africa and the relationship between Africa and the US during a virtual engagement with Hoover Institution for a conversation on various current issues and challenges facing the continent.
Responding to questions about the China debt trap in Africa, Kagame said that “China has never forced any country to borrow from them to accumulate debt,” adding that when borrowing funds externally, it is a responsibility of countries to factor in their limitations, needs and what they need to give back.
Ironically, Kagame noted that it is rather interesting that there is much talk of China’s debt in African countries but little mention of the Paris Club which includes countries from North America and Europe which lend to developing countries.
Critics have also accused China of creating debt traps for its African countries through the Belt and Road Initiative (BRI) cooperation. But economic experts have said that contrary to simple foreign aid or official development aid that often relies on the one-way flow of financial aid, BRI is a comprehensive model of equal economic cooperation.
An article published by Deborah Brautigam and Meg Rithmire in The Atlantic on February 6 titled, The Chinese ‘Debt Trap’ Is a Myth, states categorically that the narrative wrongfully portrays both Beijing and the developing countries it deals with.
The writers state that “Our research shows that Chinese banks are willing to restructure the terms of existing loans and have never actually seized an asset from any country.”
Earlier in an article titled “The myth of China’s ‘debt-trap diplomacy’” published in August 24, 2020 in The Spectator, writer Lee Jones says “Rather than trying to deter developing countries from accepting Chinese development finance, they should provide meaningful alternatives, and help developing countries to manage Chinese investment, loans and contractors for the benefit of their own people.”
Speaking during the high-level Forum on China-Africa Cooperation meeting held in September, 2018 in Beijing, Chinese President Xi Jinping assured the leaders that China does not interfere in Africa's internal affairs and does not impose its own will on Africa. He added that China's investment in Africa comes with 'no political strings attached.’