By He Wenping
Africa's development has once again become a hot topic on the
eve of the G8 Summit.
Some Western media and politicians are pointing their fingers at
China on the issue of providing aid and loans to Africa.
German Finance Minister Peer Steinbrueck said at the G8 finance
ministers' meeting, convened earlier this month to set the tone for
the summit, that China's aid to Africa impacts Western creditor
nations' efforts to reduce African nations' debts and could trigger
a new round of debt crisis.
Careful study of the issue, however, does not support their
conclusion.
As a matter of fact, Chinese aid and loans to Africa are much
smaller in sum than those from Western countries, so have less
impact on the debt issue.
This does not include a host of other factors such as the origin
of the debt issue, China's efforts at resolving the debt problem,
and the effects of Chinese aid and credits on African
countries.
All taken, it is hard to reach the conclusion that China's
supposedly irresponsible aid to African nations could trigger a new
debt crisis.
As a matter of fact, Chinese aid, investment and economic
cooperation with African nations have contributed significantly to
the strong rebound of the African economy in recent years.
The debt issue in Africa began decades ago. The astronomical
US$300 billion debt constitutes the bottleneck of Africa's economic
development.
Western countries are in fact responsible for the debt. Many
African countries, feeling the pinch of capital shortfalls in their
efforts to industrialize, borrowed heavily from abroad in the 1960s
and 70s.
However, the climate for African countries' exports deteriorated
over the last two decades or so, owing to the plummeting of prices
for primary products and trade barriers erected by Western
countries.
This has led to payment imbalances and the weakening of African
nations' payment capabilities. As a result, many African countries
have to borrow -- creating new debts to pay off old ones. The
problem is compounded by high interest rates.
Although China is a minor creditor country compared with Western
creditor nations and monetary institutions - and at the same time a
debtor developing nation itself - the country still makes efforts
to help resolve the African debt issue.
At the First China-Africa Cooperation Forum in October 2000 in
Beijing, the Chinese government pledged to write off African
countries' 156 overdue debts totaling 10.5 billion yuan (US$1.3
billion) in two years. The pledge was fulfilled ahead of
schedule.
?
At the Third China-Africa Cooperation Forum last November in
Beijing, the Chinese government again pledged to forgive the
government interest-free loans of more than 10 billion yuan (US$1.3
billion) overdue by the end of 2005. These were loans made to the
most heavily in debt and least developed of the African countries
with diplomatic ties to China.
China started providing aid to Africa in 1956. During Premier
Zhou Enlai's visit to Africa in the early 1960s, the Chinese
government established eight principles for offering aid to foreign
countries.
These principles clearly state that the Chinese government does
not attach any conditions to its aid nor demand any privileges;
that China provides aid to the recipients in the form of
interest-free or low-interest loans and will reschedule repayment
if necessary; that Chinese aid is aimed at helping the recipients
embark on the road to economic independence and self-reliance
rather than increasing their dependence on China; that China
promises to help the recipient countries master the technology in
its technical aid; that China will try to provide the best possible
equipment and materials it makes and that Chinese experts sent to
the recipient countries should be treated the same as local
experts, without special privileges.
Under these principles, China has provided African countries
with a total of 44.4 billion yuan (US$5.55 billion) in aid as of
May 2006. It has helped build textile mills, hydropower stations,
sport venues, hospitals and schools, more than 800 projects in
all.
?
The Tanzania-Zambia Railway was built with Chinese aid in the 1970s
when China itself was facing economic difficulties. Some 50,000
Chinese laborers and engineers worked side by side with local
workers in constructing the 1,860-kilometer railway. And 64 gave
their lives.
The Chinese economy's rapid growth has helped raise the prices
of primary products on the world market, which, in turn, increases
the foreign-exchange income of the African countries engaged in
exporting primary products. It improves their foreign trade climate
and strengthens their payment capabilities.
Now that the African economy has been growing at a rate of 5 to
6 percent annually, some credit should go to the Chinese
factor.
For example, the once war-torn Angola has been enjoying
double-digit economic growth in recent years because China helped
build the country's infrastructure. It also made large investments
in the country. Last year, the Angolan economy grew at a rate as
high as 17 per cent.
Stopping aid and loans to Africa is not the right prescription
to avoid a new round of debt crisis. The countries urgently need
development capital.
Instead, attention ought to be paid to raising the impact of the
aid and loans so that African recipients can improve their own
payment capabilities through economic progress and step out from
the vicious cycle of piling on new debt to pay off existing
debt.
Africans themselves see this clearly. After last year's G8
Summit, finance ministers of many African countries made it clear
that Africa urgently needed loans and investments from China.
Abdoulaye Diop, Senegal's finance minister, said that the loans
provided by the World Bank, the International Monetary Fund and the
African Development Fund are slow in coming and weighted down with
numerous conditions.
In contrast, aid and loans from China come through quickly with
no conditions attached. And African countries don't have to
sacrifice their sovereignty and dignity in acquiring these loans
and aid. So, African nations widely favor Chinese aid and
credits.
The author is a researcher with the Institute for West Asian
and African Studies, Chinese Academy of Social Sciences.
(China Daily June 6, 2007)
