《南华早报》长文：

中国在非洲的大量贷款只能核销。

肯尼亚、埃塞、博茨瓦拉、喀麦隆，无一例外。

Lender’s remorse? China finds Africa projects require a growing wave of debt forgiveness.

From Kenya to Ethiopia, Botswana to Cameroon, belt and road developments have seen write-offs of hundreds of millions of dollars.

African nations have problems making repayments, which report says raises ‘legitimate concerns about the sustainability of China’s outbound lending’.

Perhaps yielding to growing criticism over its lending practices in Africa, China is writing off or restructuring debt for an increasing number of African countries in financial distress. China’s embassy in Kenya said that Beijing was ready to help heavily indebted African countries ease their debt burdens. “If some African countries encounter difficulties to repay Chinese loans, we will have bilateral consultations with them and take flexible measures according to international practice and market principles,” the embassy said.

Critics warn that Beijing may be ensnaring nations with unsustainable debts through its signature trillion-dollar infrastructure and development programme, the Belt and Road Initiative.

Beijing dismisses the claims as groundless, saying that no country faces a crisis because of its cooperation with China. Embassy spokeswoman Huang Xueqing said some countries may face difficulties in repaying their debts but noted that each country’s situation was different, the causes were complicated and involved many factors and different parties.

“Changes in the external economic environment also affect some countries severely,” Huang said.

Without disclosing the amount, in April Beijing wrote off the interest-free loans Ethiopia owed China at the end of 2018.

Ethiopia has borrowed more than US$13.7 billion from China between 2000 and 2017, according to the China Africa Research Initiative at the Johns Hopkins School of Advanced International Studies. Ethiopia, China’s second-largest African borrower after Angola, also received relief when Beijing extended the repayment period from 10 years to 30 years for a US$3.3 billion loan it had taken on to build its Addis-Djibouti railway line.

This year, China cancelled Cameroon’s US$78 million debt. Last year, it wrote off Botswana’s US$7.2 million debt and US$10.6 million that Lesotho owed. In 2017, it cancelled US$160 million of debts owed by Sudan. And the recent deal to restructure debt owed by the Republic of Congo helped unlock US$449 million from the International Monetary Fund (IMF). The central African nation’s troubles can be traced to mid-2014 when, because of global oversupply, crude oil prices fell from a high of US$100 per barrel to as low as US$30. Oil sales account for more than 70 per cent of the government’s revenues. However, debt levels soared to 118 per cent of Congo’s annual economic output by 2017. With a deep hole in the country’s finances, it was China that stepped in to help.

China holds more than a third or US$2.5 billion of the Congolese debt, which stands at about US$9 billion. Since 2017, the Republic of Congo has been trying to get financing from the IMF to revive its economy. The IMF demanded that the country restructure its Chinese debt as a precondition for a three-year extended credit facility programme. China’s decision to restructure the debt is in response to the IMF demand. Zambia, Angola, Mozambique and Djibouti are said to be currently engaged in similar negotiations with China.

A recent report conducted by the Oxford China Africa Consultancy and the Beijing-based group Development Reimagined said Beijing had written off about US$9.8 billion to other countries since 2000, with the majority of the Chinese debt cancellation to nations in Africa as well as Asia and the Pacific. In Africa, the report showed, Beijing had cancelled US$2.2 billion, with the East African region receiving US$1 billion, about half of the forgiveness. China-focused research firm Rhodium Group recently reviewed 40 cases of China’s external debt renegotiations and found that such renegotiations among borrowing countries were common. As a result, Rhodium Group said, “the sheer volume of debt renegotiations points to legitimate concerns about the sustainability of China’s outbound lending”.

The Rhodium researchers noted that more cases of distress should emerge in the coming few years, since many Chinese projects were launched from 2013 to 2016, along with the loans to finance them. Observers said Beijing was sensitive to criticism from African governments about both their debt burdens and the repayment terms that were increasingly difficult to meet.

David Shinn, a diplomat and professor at George Washington University’s Elliott School of International Affairs, said China was restructuring these debts because it understood that it had no better choice. “These countries simply cannot repay on schedule. China has a pretty good record on restructuring debt and is facing the reality,” Shinn said. However, China has taken the position that it only cancels loans that are interest-free. “That constitutes a modest amount of Africa’s total debts with China.

Most of China’s loans to Africa are concessionary and eligible for restructuring but – as far as I can tell – not cancelling,” Shinn said. Scholastica Odhiambo, an economics lecturer at Maseno University in Kenya, said Beijing was worried about the heavy indebtedness and repayment challenges it faced for its debt-based infrastructure funding in Africa.

She said Chinese loans were tied to social infrastructure, including roads, airports and seaports, with collateral pegged to future revenues from natural resources and funded investments – China sometimes takes up the management of projects it has financed to recoup the investment. “Just like a commercial bank – which does a risk assessment and gauges the borrower’s capacity to pay – they have just woken up to the reality that some debts would become bad debts, which may not be recovered at all,” Odhiambo said of China’s belt and road programme. XN Iraki, an associate professor at the University of Nairobi School of Business, said that in forgiving some loans, China may be responding to the much-publicised problem of debt traps – or it could simply be engaged in some strategic diplomacy. However, this forgiveness could have the opposite effect: countries borrowing more from China because the debts can be forgiven.

“The moral hazard in economics? You drive the car fast because it’s insured. You commit crime because you can be bailed,” Iraki explained.

Data compiled by the China-Africa Research Initiative at the Johns Hopkins University School of Advanced International Studies estimates that Beijing has advanced loans worth US$143 billion to African countries since 2000. China is the largest single creditor to African countries, accounting for about one-fifth of the continent’s external debt, according to the Jubilee Debt Campaign, a coalition of organisations seeking cancellation of the poorest nations’ debts. The growing number of countries struggling to repay loans may affect new

loan agreements. Observers say that China has become more careful in lending because it is concerned that it has made too much credit available to some African countries. “The lesson China has learned in the past several years is that it must be more selective with loans that it makes to Africa (and elsewhere),” Shinn said. “This is happening today, and China is lending less money to Africa now.”

In April, at the second Belt and Road Forum in Beijing, Chinese President Xi Jinping stressed that China would push for sustainable financing to ease debt burdens and commit to “transparency and clean governance”. China also appears more hesitant in funding projects it is not sure will produce a return on its investment. For example, Kenya has not yet been able to secure the US$3.8 billion funding it needs to extend its railway to Kisumu, a city in the western part of the country, amid growing concerns over the project’s commercial viability. China has said Kenya must redo a feasibility study for the entire project before further lending would be considered. Additionally, the concerns over the viability of the Djibouti-Addis railway line may have exacerbated the situation, pushing China to rethink its lending priorities. With China becoming cautious about the kinds of projects it finances, there are further consequences for some countries – they may find it difficult to gain access to credit from Beijing.

Martyn Davies, managing director of Emerging Markets and Africa at Deloitte, said in a recent interview that China and its lenders were aware of the disconnect on funding for infrastructure projects and their commercial reality. “The Chinese are more cautious in recent times because Beijing is no longer giving free money as they used to do. They now want to be shown the bankability of the project and financial sustainability before releasing money,” he said.