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China slashes its financial commitment to Africa: Instead of $60 bn pledged earlier, Xi cuts it to $40 bn

Is China revisiting its Africa policy?

China has drastically reduced its financing commitment to Africa. In the recently held China-Africa forum, Chinese President Xi Jinping pledged $40 billion over the next three years, down from the earlier promised $60 billion. Instead, Xi expanded vaccine diplomacy to the continent.

While Beijing had quietly started reducing its financial pledges to the continent, it is now getting more and more cautious of investing further in the continent. Though it continues to be the largest lender to Africa, since 2019 the financing has been gradually thinned.

“China has entered a phase of greater caution with regard to Africa. After two decades of heavy state funding, it is beginning to pull the brakes,” Lina Benabdallah of Wake Forest University in North Carolina was quoted as saying by the Guardian.

Also read: Will China’s real estate collapse trigger a financial meltdown like the 2008-09 US subprime crisis?

A sectoral decomposition of Chinese loans highlights that more than 65 per cent of its lending goes to infrastructure sectors such as energy, mining, construction, transport among others, The Carnegie study said, adding that in comparison, traditional lenders—mostly from Europe and North America as well as Japan in the OECD-Development Assistance Committee focus more on social sectors like health, population, education, and humanitarian aid.

While several reports have suggested that African countries have been getting into a debt trap, Foreign Policy noted that African governments have willingly accepted loans from Beijing because no accountability was required in return. “African leaders could win elections thanks to the roads, ports, and railways promised to citizens,” it said.

Countries including Egypt, Nigeria, Angola, the Republic of Congo, Zambia, Ghana, Algeria, and the Democratic Republic of Congo (DRC) among others have the highest Chinese debt.