China cancels 17 African debts

31-VIII-22, nytimes

China announced that it would cancel the debts of 17 African countries. The move is aimed, in part, at addressing accusations of “debt trap diplomacy,” the idea that the superpower has encroached on the continent by lending countries more money than they can pay back.

Beijing hasn’t revealed who will benefit from the cancellation, but the news was already being celebrated in Malawi, one of Africa’s poorest countries. A front-page story in The Nation, an influential independent newspaper in Malawi, reported that the cancellation of 5.5 billion kwacha, or $5.3 million, had “excited Treasury and economic commentators.” In Nigeria, pundits estimated that the cancellation could clear nearly 4 percent of their country’s total borrowing.

Chinese leadership has been battling the complex debt-trap narrative, pointing to research that shows Africa owes more to Western lenders. The cancellation also positions China as an “‘all-weather friend’ in the words of the foreign ministry,” said Cobus van Staden, a co-founder of the nonprofit China-Global South Project.

But the loans China planned to cancel are zero-interest loans that amount to just a fraction of its lending to Africa, van Staden added. For instance, Angola — China’s largest debtor in Africa — is unlikely to benefit because the country borrowed from Chinese banks, said Francisco Paulo, an economist based in Luanda, Angola’s capital.

— Lynsey Chutel, Briefings writer based in Johannesburg