China pledges $10bn in Africa loans

Cairo, 09 November 2009 (Somalilandpress) — The Chinese government has pledged to give African countries billions of dollars in cheap loans at a two-day Africa-China summit in Egypt.

Addressing hundreds of Chinese and African businessmen at the Red Sea resort of Sharm El-Sheikh on Sunday, Wen Jiabao, China’s premier, said he would also cancel debts of African countries.
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“We will help Africa build up its financing capabilities … we will provide $10bn for Africa in concessional loans,” he said.

Wen insisted that his attempt to boost trade ties with Africa was not being pursued at the expense of the continent.

He rejected critics who say that resource-hungry China ignores the human-rights records of many of the continent’s nations.

“Our efforts are sincere and selfless, without political strings attached,” he said.

“China’s training of 15,000 African professionals has provided the continent with a human resource more valuable than gold.”

Investment push

The Asian giant is now Africa’s second-largest trade partner, with the average yearly growth rate of that trade at over 33 per cent.

China-Africa ties

Trade between China and Africa has ballooned by an average of 30 per cent a year over the past decade. In 2008, total trade stood at $106.8bn, up 45.1 per cent on 2007. In 2000, trade was only $10.5 bn. Africa’s combined GDP is worth approximately $1.2trn, equal to about one quarter of China’s $4.4trn economy. China’s imports from Africa are dominated by oil and minerals to fuel its booming economy. Most come from Angola, Sudan, Nigeria, Zambia, the DR Congo and the Republic of the Congo. Beijing hosted the first China-Africa summit in 2006, pledging to boost investment, trade and aid to the continent yet further. Critics say China should use its clout to press African governments on cleaning up corruption and rights abuses. China has also been urged to step up pressure on Sudan over the conflict in Darfur. China buys almost all of Sudan’s crude oil exports, spending $6.2bn in 2008.

The Sharm El-Sheikh meeting is a continuation of a push to boost investment policy that has led China to sign business deals around Africa.

In 2006, the Sino-African summit included $5bn in loans and a number of projects, including building hospitals, anti-malaria centres, schools and roads – which Chinese officials say have largely been met.

Direct investment hit $7.8bn in 2008, and total China-Africa trade grew to roughly $107bn by that year – a tenfold increase from the start of the decade.

However, critics say the inflow of cash has come at a price.

Western governments and some non-governmental agenices contend that China has paid money to governments with few strings attached and little concern for their human-rights record.

For years, Beijing has played a leading role in developing Sudan’s oil sector, even while the Khartoum government was being accused of atrocities in the conflict-ravaged Darfur region.

More recently, a little-known Chinese company signed a $7bn mining deal with Guinea’s military government.

The agreement was announced in September, just weeks after Guinean soldiers opened fire on demonstrators – allegedly killing more than 150 people.

Chinese response

Beijing, itself widely criticised in the West for its human-rights record, said it was not involved in that deal and rejects the criticism.

Speaking to Al Jazeera, Huo Zhengde, China’s ambassador in Guinea, said that companies based in the US, the UK, Australia and Russia were all doing business in the country.

“Just because these companies are doing business here, does that mean they are supporting the military government?

“So why, when Chinese companies do business here, is China accused of supporting the government?” Huo asked.

Beijing says it is up to Africans to decide whether the relationship is good for them, and is sure they will say it is.

“Practice proves that the China-Africa relationship is mutually beneficial, and co-operation is win-win, embodying the wishes of the people and the demands of the times,” Chen Deming, the Chinese commerce minister, said.

It is a theme that African businessmen working in China say they have heard echoed increasingly over the past couple of years by Chinese companies.

Some Africans welcome how China’s approach differs from that of Europe or the United States.

“China’s policy is based on mutual development. Few Western countries have a foreign policy like this – most are about telling Africans what to do,” Kwaku Atuahene-Gima, executive director of the Africa programme at the China Europe International Business School in Shanghai, said.

Craig Bond, the Beijing-based chief executive of the South Africa-based Standard Bank, the continent’s largest, told The Associated Press news agency: “The reality is that China’s come of age.

“They’ve actually begun to realise that if they want to be global citizens, they are going to have to start doing things in a sustainable way,” he said.

“They’re going to have to start worrying about all the issues that the West has been worrying about.”

Some Africa watchers argue that while some Western criticism is warranted, African nations must also shoulder a good share of the responsibility.

Edward Brown, director for policy services at the Africa Centre for Economic Transformation, a research and policy advisory organisation based in Ghana, said: “Africans need to up the ante to see how they can best leverage their potential and ensure that Chinese investments are channelled into those areas where they generate the most value.”

Source: Al Jazeera and agencies