China has refrained from offering the debt relief requested by many African nations during this week’s Forum for China-Africa Cooperation (FOCAC), instead pledging 360 billion yuan ($50.7 billion) over the next three years in credit lines and investments.
The FOCAC, initiated in 2000, gained momentum after the launch of President Xi Jinping’s Belt and Road Initiative (BRI) in 2013, which has bolstered China’s position as Africa’s largest bilateral lender. Despite the new financial commitment, China made no explicit promise to ease the growing debt burdens faced by many African countries.
“China is moving back on the front foot in terms of overseas capital deployment in emerging markets,” said Hasnain Malik of Tellimer, though he noted that China’s involvement remains below pre-pandemic levels.
China has used FOCAC to strengthen its position in Africa amid rising competition from other global powers, including the United States, the European Union, and Japan. Diplomats and leaders from over 50 African nations gathered in Beijing’s Great Hall of the People, where Chinese officials, led by President Xi, hosted discussions.
Although China’s latest financial pledge surpasses its 2021 commitment, it falls short of the $60 billion promised in 2015 and 2018, when lending to Africa under the BRI reached its peak. During that period, China funded large-scale infrastructure projects across the continent, including roads, railways, and bridges. However, since 2019, the availability of funds has dwindled, leaving many projects incomplete.
Beijing has earmarked the new funds for 30 infrastructure projects intended to improve trade links across Africa, although specific details have yet to be disclosed. The African continent, home to over one billion people, faces an annual infrastructure funding shortfall of around $100 billion, which poses a challenge to the creation of the African Continental Free Trade Area (AfCFTA).
In recent years, China has scaled back its large infrastructure projects, shifting its focus to smaller initiatives, largely due to economic pressures at home and rising debt risks in Africa. A Chinese foreign ministry spokesperson, Mao Ning, defended the decision, stating that China’s cooperation with African nations is mutually determined.
CURRENCY SWAPS AND GREEN ENERGY
China’s new commitments include launching 30 clean energy projects in Africa and offering cooperation in nuclear technology to address the continent’s chronic power shortages. These initiatives could help propel industrialization efforts that have been delayed by energy deficits.
“The outcomes of the FOCAC summit signal an impetus for green projects, especially for renewable energy installations,” said Goolam Ballim, head of research at South Africa’s Standard Bank. China, now a global leader in wind and solar energy, controls significant parts of the supply chain, helping to reduce production costs.
However, skepticism remains over the terms of Chinese investments. “The issue is not about the size of the investments but the lack of transparency around the terms of the debt,” said Trang Nguyen, global head of emerging markets credit strategy at BNP Paribas.
Countries heavily indebted to China saw no direct offers of debt relief. Instead, Beijing called for other creditors to participate in debt restructuring based on “joint actions and fair burden-sharing.”
While some African nations had hoped for major new deals, the announcements were more modest. Ethiopia and Mauritius secured new currency swap agreements with China’s central bank, while Kenya advanced talks to resume funding for its key infrastructure projects, including a modern railway intended to connect East Africa.
Despite some disappointment over the absence of sweeping financial deals, many African leaders welcomed China’s continued focus on security, humanitarian challenges, and non-financial cooperation.
“After nearly 70 years of hard work, China-Africa relations are at their best in history,” said Tanzania’s President Samia Suluhu on her X account.
