By Nicolás Promanzio
Due to the severe economic crisis that China is going through, the communist regime has begun to cut off investments in Africa and cancel debt payments in impoverished African countries that had fallen into the Belt & Road Initiative debt trap.
Over the last decade, many African countries have become heavily economically dependent on China.
First, they started with trade relations that seemed too good to be true; then, they started borrowing from the Beijing-based Central Bank at rates that, again, seemed too good to be true.
But the reality is that China knew that these countries would be unable to pay their debts, and their idea was never to receive this money back.
The Communist Party was convincing African governments to take out these loans to build infrastructure for commercial transport, such as ports, roads, railroads, and airports.
However, when these countries inevitably defaulted to the Chinese state, the Communist regime would take over the construction, keeping a crucial part of each country where it implemented this plan.
This massive program to turn dozens of African countries into economic vassals of China is known as the Belt and Road Initiative (BRI), dubbed in English as the “New Silk Road”, and was launched by Chinese president Xi Jinping in 2013, a few months after his rise to power.
Announced initially to renew and amplify old trade routes and invest in infrastructure worldwide to interconnect the Asian giant with the rest of the nations by sea, air, and land, the macabre plan was always aimed at generating a global interdependence of underdeveloped and emerging countries with China.
It is estimated that China has invested more than US$500 billion in this initiative.
Money that it rarely saw back in loan repayments: the vast majority of the funds provided gave it essential strategic control of some infrastructure in Africa, but also in Asia, Europe, and Latin America.
The investment to date is equivalent to the money needed to be in the world’s top 30 highest GDP countries.
The estimated value of the BRI by 2030 is expected to be over US$1.3 trillion.
China has invested the most so far in Africa, where countries are most vulnerable to such proposals.
Hundreds of ports, railroads, roads, airports, and even power plants have been built in countries across the continent with Chinese loans.
These loans are not ultimately intended to charge interest, but rather China hopes they will not be able to repay the money and thus keep the constructions they have built with the borrowed money.
The preferential guarantees imposed by China in its contracts put the sovereignty of the debtors in a critical situation, the famous “debt trap”.
Since the beginning of the 21st century and facilitated by the dissolution of the USSR and the neglect of the United States, the Chinese Communist Party began to build closer ties with African countries.
China is interested in abundant natural resources, raw materials, and cheap labor in that continent.
The main platform for interaction between Africa and the People’s Republic of China is the “China-Africa Cooperation Forum”, held every three years since 2000.
Currently, the forum has been integrated into the Belt and Road Initiative.
Since then, cheap Chinese products have flooded African markets, and relations between African countries and China are known as “debt diplomacy”, a form of vassalage in the 21st century.
This is the context of the last decade, but the situation has changed slightly since the pandemic broke out.
China is going through the worst economic crisis since its commercial opening in the 1970s due to the exhaustion of the mixed financial system and the brutal quarantines imposed on its population.
In this way, in 2022, investments in the Belt and Road Initiative in Africa reached a minimum of money exchanged in years.
Last year, the amount of money invested in construction in sub-Saharan Africa was US$4.5 billion.
This implies almost 50% less than the previous year when around US$8.1 billion was invested in 2021.
On the other hand, investment by private Chinese companies in BRI projects in sub-Saharan Africa also declined from US$8.5 billion in 2021 to less than US$3 billion last year, a drop of almost 60%.
In addition, there has been absolute silence for almost a year on new announcements on Chinese funding for rail and port projects in Africa.
Although there have been some announcements, such as investments in Argentina and Uruguay, China has ultimately let go of its hand to its African economic vassals.
THE REASONS FOR THE REDUCTION IN ECONOMIC “AID”
- International image
After the debt crisis in Sri Lanka and accusations worldwide that China is practicing debt-trap diplomacy, the communist regime wants to repair its image as a good creditor by reducing the number of loans it grants.
2. African countries cannot borrow more money
The capacity of many African countries to accept new loans is deficient due to the pandemic and the unpayable interest on previous loans.
3. Chinese domestic economic dynamics
After the blow to the Chinese domestic market from the zero-tolerance policy during the pandemic, Chinese companies pour significant resources into domestic projects, neglecting riskier investments in Africa.
CHANGE OF CHANCELLOR, CHANGE OF COURSE?
On January 1, there were significant changes in the Chinese Foreign Ministry after president Xi revalidated his regime, placating the internal opposition that demanded the end of his decade-long term of office.
Thus, the Foreign Minister of the People’s Republic of China, Wang Yi, assumed the leadership of the Chinese Communist Party’s Foreign Affairs Office, the highest position in Chinese diplomacy, replacing the historic Yang Jiechi, mastermind of the BRI in Africa.
In addition, Qin Gang, close to Wang, took over as Minister of the People’s Republic, once again unifying these two diplomatic portfolios in the same wing of the Communist Party. The first thing Qin did upon taking office was to tour Africa.
On his tour, Qin visited many countries on the African continent and signed documents in many fields, including the cancellation of various debts and ending the comprehensive program promoting debt diplomacy.
Simultaneously, Russia, the United States, and other powers launched their trips to Africa earlier this year, showing that China’s (slight) withdrawal from the continent unleashed an actual race to fill this vacuum.
At the same time, several African countries, such as Egypt, the Democratic Republic of Congo, Zambia, Mozambique, and Uganda, showed their discontent with China over this decision, claiming that the communist nation “let go of their hand at the most difficult moment” and all have signed new trade agreements with other countries.