China defends Africa investments in run-up to belt and road forum

China’s investment in Africa does not “change the rules” of development finance, according to a report released ahead of next week’s third Belt and Road Forum for International Cooperation – but Beijing has conceded the continent has a debt problem that cannot be ignored.

Its sovereign loans to Africa totalled around US$160 billion between 2000 and 2020, two-thirds of which were made after Beijing’s Belt and Road Initiative was rolled out in 2013, according to a report published by Peking University on Thursday.

“China’s financing policy goals for Africa are highly consistent with the United Nations’ 2030 Sustainable Development Goals,” the report said. “It is an important component of the existing development financing system and helps fill the funding gap.”

The report argued a 1 per cent increase in China’s loans would contribute to 0.18 to 0.3 per cent of economic growth in Africa, helping to improve local infrastructure, create industrial jobs and boost school enrolment rates.

Issued in part as a response to claims of a possible “debt trap” and worries that China might slow down future investment in Africa, the report came ahead of the two-day summit, which starts on Tuesday.

“I cannot deny the challenges or difficulties that China and Africa have encountered in financing cooperation,” said Wu Peng, director of the Ministry of Foreign Affairs’ African department, during a Thursday press conference held for the document’s release. “The debt problem is right in front of us, and we cannot ignore it.”

Africa is one of the “most important continents” taking part in Beijing’s Belt and Road Initiative, with 52 African countries signing onto an agreement or memorandum of understanding as of June, according to the official Xinhua News Agency.