Balamir
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Let's share and discuss the developments on this subject under this title.
China lends money to the country it targets, which it knows it will not pay. When the borrowing country fails to pay, China wants to make a strategic base or port that it predicted in that country. Meanwhile, it is working on society with it's publications addressing the international press. Railway highway infrastructure investments to the country. The surface and underground resources of the country and even the will of the country are under the domination of China. It is currently being tried in some south east asian countries. It does it in Africa.
As Africa Groans Under Debt, It Casts Wary Eye at China
Easing debt distress of African economies pits Western governments against Beijing, continent’s largest creditor
JOHANNESBURG -- As international momentum builds behind debt relief for Africa's most poverty-stricken and heavily indebted economies, a tussle is brewing between Western governments, private investors and the continent's largest creditor: China.
Wealthy Western administrations watching their own economies lurch toward recession are loath to forgive African debt if they think the money will indirectly support Chinese creditors, while Beijing is worried about setting a precedent for widespread forgiveness.
Some African governments already bilaterally petitioning China for relief say Chinese envoys are citing provisions in loan agreements that would transfer collateral, in some cases strategic state assets, into Beijing's hands. The moves will be closely watched by the dozens of developing countries, from Pakistan to the Maldives, that have borrowed billions from China to build infrastructure.
Two decades of record lending have stacked up an estimated $143 billion of African debt to China, much of which has financed large-scale infrastructure projects from light-railway systems in Ethiopia to airports in Zambia and ports in Tanzania, according to Johns Hopkins School of Advanced International Studies.
Precisely how much African economies owe to China isn't known since Beijing is secretive about the terms of its programs and publishes few details on its lending, but the World Bank says it is the largest slice of a total debt load valued at $583 billion. It is a burden that has become increasingly complex in recent years as bilateral loans from Western governments have been subsumed by Chinese lending and record issuance of sovereign bonds.
China's ballooning loans to African governments reflect how foreign policy under President Xi Jinping has featured debt-powered economic outreach for the developing world. Even before the coronavirus crisis, much of that debt looked too heavy for some of Beijing's client governments and it appeared stung by rising global criticism of its strategies. A 2019 International Monetary Fund report estimated that around 40% of the continent's low-income countries were in debt distress. A Harvard Business Review study published in February suggested that 50% of China's loans to developing countries goes unreported.
Now, the pandemic-induced economic shock is all but wiping out governments' ability to repay. London-based think tank Overseas Development Institute forecasts that swooning commodity prices will cut African export revenues between $36 billion and $54 billion this year, and for some nations slash export earnings worth up to 20% of gross domestic product.
"This may mean that African countries will struggle to service their debt, not only owed to China but to all creditors," according to the institute researcher Linda Calabrese.
To head off Africa's looming debt crisis, the Group of 20 nations, which includes China, agreed to suspend collection on government debt this year for over 75 of the world's poorest countries, in line with calls from the IMF and the World Bank for relief. China's Foreign Ministry said on Monday it was aware of calls for a debt-relief program for African countries, and was willing to study the possibility with the international community.
Analysts say those statements suggest China and the West could reach an accommodation on a broader policy of debt restructuring, but there is also a looming threat the debate will become more politicized and antagonistic, which would have far-reaching consequences for some of the world's poorest nations.
"It would be a silver lining of this crisis if China and the West could coordinate on debt relief, but the concern it becomes politicized in the way we've seen with almost every other issue, including now the World Health Organization," said Eric Olander, managing editor of the China Africa Project, referring to President Trump's decision on April 14 to cut U.S. funding for the WHO over the agency's coronavirus response.
The Trump administration has repeatedly warned African nations that Chinese lending could result in them losing control of strategic assets. China argues that Western lending, including private-sector support and money through international institutions, outweighs Beijing's loans.
Some African governments say they are already petitioning Beijing directly for relief. Zambia, Africa's second-largest copper producer, is urgently pursuing an agreement but its officials say Beijing is demanding collateral in exchange for deferral or forgiveness. Zambia doesn't disclose its debt to China, but a separate Johns Hopkins study estimated it was $6.4 billion at the end of 2017, accounting for 44% of its total debt.
Two senior Zambian officials on a government panel negotiating debt restructuring with China said they are considering giving the Chinese copper-mining assets in exchange, including the country's third-largest mine, Mopani, owned by Glencore PLC, a London-listed mining company.
On Tuesday, Zambia said it planned to revoke the mining license of Mopani accusing the miner of violating license terms after suspending operations due to coronavirus disruptions. The Mopani chief executive was briefly detained at Lusaka airport before being released. The two Zambian officials said the government might shift the mine asset to Chinese ownership if it successfully takes it back from Glencore.
A Glencore spokesman said the company was "committed to engaging in a constructive dialogue with the Zambian authorities."
Officials in other African finance ministries said loans from Chinese entities contained provisions that would force them to surrender state assets if they couldn't repay. Loans to Uganda for the $325 million loan to upgrade Entebbe airport and a $1.4 billion for a power plant in Karuna both contain that provision, although the government isn't yet defaulting.
When Sri Lanka was unable to repay a loan for a Chinese-built port, the government granted a state-run China-based shipping group a 99-year lease on the facility.
But China has also unilaterally canceled debt arrears for poor countries, most recently in 2018 when Mr. Xi hosted dozens of African leaders at a summit in Beijing. But such forgiveness has typically included only no-interest loans, a small and older portion of China's government-to-government lending.
It won't be as easy for China to outright forgive much of the debt that has been core to Mr. Xi's diplomatic efforts in recent years. There is simply too much of it spread world-wide, analysts say, and Beijing can't risk the possible knock-on impact to borrowers with a wholesale forgiveness.
"We can say that China may defer or renegotiate some of its debt," says Overseas Development Institute's Ms. Calabrese. "Debt cancellation may be less likely."
Beijing appears sensitive to concerns that more governments can't afford its loans. "China never presses countries in difficulties for debt payment," Chinese Foreign Ministry spokesman Zhao Lijian told a news conference on April 6 when asked about possible relief for African nations. "We resolve issues like this through bilateral consultation."
During the coronavirus pandemic, Beijing has preferred to highlight its export of masks and other support to poor countries. But that narrative has since been undercut by reports from the southern city of Guangzhou that Africans were being thrown out of their apartments and rounded up in blunt efforts to stop the spread of the coronavirus. African diplomats in Beijing protested the actions and Assistant Foreign Minister Chen Xiaodong met with African envoys from more than 20 countries to reduce tensions.
The global slowdown caused by the coronavirus is likely to narrow the scope of Mr. Xi's Belt and Road Initiative, which the government had already begun to de-emphasize amid criticism of debt loads in the continent and signs of other problems with the program. During the Africa summit in 2018, Mr. Xi pledged a massive $60 billion in support for the region but didn't lift it as in past years.
Despite the recent G-20 agreement, it isn't clear how Beijing might participate in multilateral efforts to ease Africa's debt burden since Chinese diplomats and government bankers have preferred to negotiate with countries individually and behind closed doors. So far, Beijing has resisted joining Western-run debt-restructuring efforts organized through the Paris Club of creditor nations and the Organization for Economic Cooperation and Development.
Mr. Xi's Belt and Road Initiative is funded primarily by commercial loans in U.S. dollars to host governments from Beijing-controlled institutions, like Export-Import Bank of China. China ExIm debt agreements seen by The Wall Street Journal in recent years show how borrowers are required to give Chinese sellers precedence in spending loan proceeds and make twice yearly payments of principal and interest to a New York account held by the bank.
Critics say China's closed-door, bilateral negotiations with creditor countries puts Beijing at a major advantage over borrowers when loans are being created, and will do so during any renegotiation.
Yun Sun, of the Washington-based nonpartisan think tank Stimson Center, said Beijing was unlikely to approve wholesale forgiveness amid the coronavirus. "The Chinese authorities are concerned about collective claims of responsibility," she said.
Write to Joe Parkinson at joe.parkinson@wsj.com, James T Areddy at
https://www.wsj.com/articles/as-afr...na-11587115804?mod=searchresults&page=1&pos=7
China lends money to the country it targets, which it knows it will not pay. When the borrowing country fails to pay, China wants to make a strategic base or port that it predicted in that country. Meanwhile, it is working on society with it's publications addressing the international press. Railway highway infrastructure investments to the country. The surface and underground resources of the country and even the will of the country are under the domination of China. It is currently being tried in some south east asian countries. It does it in Africa.
As Africa Groans Under Debt, It Casts Wary Eye at China
Easing debt distress of African economies pits Western governments against Beijing, continent’s largest creditor
JOHANNESBURG -- As international momentum builds behind debt relief for Africa's most poverty-stricken and heavily indebted economies, a tussle is brewing between Western governments, private investors and the continent's largest creditor: China.
Wealthy Western administrations watching their own economies lurch toward recession are loath to forgive African debt if they think the money will indirectly support Chinese creditors, while Beijing is worried about setting a precedent for widespread forgiveness.
Some African governments already bilaterally petitioning China for relief say Chinese envoys are citing provisions in loan agreements that would transfer collateral, in some cases strategic state assets, into Beijing's hands. The moves will be closely watched by the dozens of developing countries, from Pakistan to the Maldives, that have borrowed billions from China to build infrastructure.
Two decades of record lending have stacked up an estimated $143 billion of African debt to China, much of which has financed large-scale infrastructure projects from light-railway systems in Ethiopia to airports in Zambia and ports in Tanzania, according to Johns Hopkins School of Advanced International Studies.
Precisely how much African economies owe to China isn't known since Beijing is secretive about the terms of its programs and publishes few details on its lending, but the World Bank says it is the largest slice of a total debt load valued at $583 billion. It is a burden that has become increasingly complex in recent years as bilateral loans from Western governments have been subsumed by Chinese lending and record issuance of sovereign bonds.
China's ballooning loans to African governments reflect how foreign policy under President Xi Jinping has featured debt-powered economic outreach for the developing world. Even before the coronavirus crisis, much of that debt looked too heavy for some of Beijing's client governments and it appeared stung by rising global criticism of its strategies. A 2019 International Monetary Fund report estimated that around 40% of the continent's low-income countries were in debt distress. A Harvard Business Review study published in February suggested that 50% of China's loans to developing countries goes unreported.
Now, the pandemic-induced economic shock is all but wiping out governments' ability to repay. London-based think tank Overseas Development Institute forecasts that swooning commodity prices will cut African export revenues between $36 billion and $54 billion this year, and for some nations slash export earnings worth up to 20% of gross domestic product.
"This may mean that African countries will struggle to service their debt, not only owed to China but to all creditors," according to the institute researcher Linda Calabrese.
To head off Africa's looming debt crisis, the Group of 20 nations, which includes China, agreed to suspend collection on government debt this year for over 75 of the world's poorest countries, in line with calls from the IMF and the World Bank for relief. China's Foreign Ministry said on Monday it was aware of calls for a debt-relief program for African countries, and was willing to study the possibility with the international community.
Analysts say those statements suggest China and the West could reach an accommodation on a broader policy of debt restructuring, but there is also a looming threat the debate will become more politicized and antagonistic, which would have far-reaching consequences for some of the world's poorest nations.
"It would be a silver lining of this crisis if China and the West could coordinate on debt relief, but the concern it becomes politicized in the way we've seen with almost every other issue, including now the World Health Organization," said Eric Olander, managing editor of the China Africa Project, referring to President Trump's decision on April 14 to cut U.S. funding for the WHO over the agency's coronavirus response.
The Trump administration has repeatedly warned African nations that Chinese lending could result in them losing control of strategic assets. China argues that Western lending, including private-sector support and money through international institutions, outweighs Beijing's loans.
Some African governments say they are already petitioning Beijing directly for relief. Zambia, Africa's second-largest copper producer, is urgently pursuing an agreement but its officials say Beijing is demanding collateral in exchange for deferral or forgiveness. Zambia doesn't disclose its debt to China, but a separate Johns Hopkins study estimated it was $6.4 billion at the end of 2017, accounting for 44% of its total debt.
Two senior Zambian officials on a government panel negotiating debt restructuring with China said they are considering giving the Chinese copper-mining assets in exchange, including the country's third-largest mine, Mopani, owned by Glencore PLC, a London-listed mining company.
On Tuesday, Zambia said it planned to revoke the mining license of Mopani accusing the miner of violating license terms after suspending operations due to coronavirus disruptions. The Mopani chief executive was briefly detained at Lusaka airport before being released. The two Zambian officials said the government might shift the mine asset to Chinese ownership if it successfully takes it back from Glencore.
A Glencore spokesman said the company was "committed to engaging in a constructive dialogue with the Zambian authorities."
Officials in other African finance ministries said loans from Chinese entities contained provisions that would force them to surrender state assets if they couldn't repay. Loans to Uganda for the $325 million loan to upgrade Entebbe airport and a $1.4 billion for a power plant in Karuna both contain that provision, although the government isn't yet defaulting.
When Sri Lanka was unable to repay a loan for a Chinese-built port, the government granted a state-run China-based shipping group a 99-year lease on the facility.
But China has also unilaterally canceled debt arrears for poor countries, most recently in 2018 when Mr. Xi hosted dozens of African leaders at a summit in Beijing. But such forgiveness has typically included only no-interest loans, a small and older portion of China's government-to-government lending.
It won't be as easy for China to outright forgive much of the debt that has been core to Mr. Xi's diplomatic efforts in recent years. There is simply too much of it spread world-wide, analysts say, and Beijing can't risk the possible knock-on impact to borrowers with a wholesale forgiveness.
"We can say that China may defer or renegotiate some of its debt," says Overseas Development Institute's Ms. Calabrese. "Debt cancellation may be less likely."
Beijing appears sensitive to concerns that more governments can't afford its loans. "China never presses countries in difficulties for debt payment," Chinese Foreign Ministry spokesman Zhao Lijian told a news conference on April 6 when asked about possible relief for African nations. "We resolve issues like this through bilateral consultation."
During the coronavirus pandemic, Beijing has preferred to highlight its export of masks and other support to poor countries. But that narrative has since been undercut by reports from the southern city of Guangzhou that Africans were being thrown out of their apartments and rounded up in blunt efforts to stop the spread of the coronavirus. African diplomats in Beijing protested the actions and Assistant Foreign Minister Chen Xiaodong met with African envoys from more than 20 countries to reduce tensions.
The global slowdown caused by the coronavirus is likely to narrow the scope of Mr. Xi's Belt and Road Initiative, which the government had already begun to de-emphasize amid criticism of debt loads in the continent and signs of other problems with the program. During the Africa summit in 2018, Mr. Xi pledged a massive $60 billion in support for the region but didn't lift it as in past years.
Despite the recent G-20 agreement, it isn't clear how Beijing might participate in multilateral efforts to ease Africa's debt burden since Chinese diplomats and government bankers have preferred to negotiate with countries individually and behind closed doors. So far, Beijing has resisted joining Western-run debt-restructuring efforts organized through the Paris Club of creditor nations and the Organization for Economic Cooperation and Development.
Mr. Xi's Belt and Road Initiative is funded primarily by commercial loans in U.S. dollars to host governments from Beijing-controlled institutions, like Export-Import Bank of China. China ExIm debt agreements seen by The Wall Street Journal in recent years show how borrowers are required to give Chinese sellers precedence in spending loan proceeds and make twice yearly payments of principal and interest to a New York account held by the bank.
Critics say China's closed-door, bilateral negotiations with creditor countries puts Beijing at a major advantage over borrowers when loans are being created, and will do so during any renegotiation.
Yun Sun, of the Washington-based nonpartisan think tank Stimson Center, said Beijing was unlikely to approve wholesale forgiveness amid the coronavirus. "The Chinese authorities are concerned about collective claims of responsibility," she said.
Write to Joe Parkinson at joe.parkinson@wsj.com, James T Areddy at
https://www.wsj.com/articles/as-afr...na-11587115804?mod=searchresults&page=1&pos=7
