China's Hu Pledges $20 Billion in Loans to African States

South African President Jacob Zuma and People's Republic of China Premeir during an August 2010 visit to Beijing. The two states signed numerous economic cooperation agreements., a photo by Pan-African News Wire File Photos on Flickr.

China’s Hu Pledges $20 Billion in Loans to African Nations

By Bloomberg News - Jul 19, 2012

Chinese President Hu Jintao pledged $20 billion in new loans to Africa for infrastructure and manufacturing, promising to expand the relationship between the continent and its largest trading partner.

China will also offer 18,000 government scholarships and send 1,500 medical staff to the continent, Hu said in a speech yesterday at the Forum on China-Africa Cooperation in Beijing. He promised China will play a “positive and constructive role in African affairs.”

Hu’s speech underscored China’s push both to tap Africa’s natural resources to fuel its economic growth and deliver its goods to African markets. The country has put itself forward as an alternative to western partners, offering trade deals and infrastructure loans without preconditions involving human rights or governance reform.

“We will continue to stand firm with the African people and forever be a good friend, good partner and good brother of the African people,” Hu said. “We should oppose the practices of the big bullying the small, the strong domineering over the weak, and the rich oppressing the poor.”

China’s two-way trade with Africa was $166 billion in 2011, three times the 2006 amount, Hu said, and China became the continent’s biggest trading partner in 2009. China also paid for and built the African Union’s $200 million new headquarters in Addis Ababa, Ethiopia’s capital.

Loan Distribution

Hu didn’t say how the $20 billion in loans, which total more than Zambia’s annual gross domestic product, will be parceled out across the continent. The loans will be distributed over three years, Hu said.

After Hu spoke and leaders from several African nations extolled the relationship, South African President Jacob Zuma warned that the current trade relationship between the two sides couldn’t last.

China delivers debt relief, human resources development and investment, while Africa has supplied raw materials and technology transfers, Zuma said.

“This trade pattern is unsustainable in the long term,” Zuma said. “Africa’s past economic experience with Europe dictates a need to be cautious when entering into partnership with other economies.”

That comment reflected how, even as African leaders seek closer ties with China, some people on the continent are becoming more critical of the relationship and the imbalances in it, according to Adams Bodomo, the director of the African Studies Program at the University of Hong Kong.

Begging Bowls

“I am uncomfortable that China grabs headline news: ‘We will offer U$20 billion credit-lines and loans to Africa over three years!’ and yet we hear nothing from the Africa side,” Bodomo said. “What did the African leaders bring to Beijing? Empty begging bowls which are now filled with $20 billion? This is a shame.”

China is willing to work with South Africa on balancing bilateral trade, Chinese Premier Wen Jiabao said, according to the official Xinhua News Agency.

Later yesterday, more than 20 Chinese and African enterprises signed economic cooperation agreements worth $341 million, Xinhua said. The forum in Beijing was attended by leaders from across Africa, including Benin, Kenya, Ivory Coast and Equatorial Guinea.

To contact Bloomberg News staff for this story: Regina Tan in Beijing at rtan87@bloomberg.net; Yidi Zhao in Beijing at yzhao7@bloomberg.net

To contact the editor responsible for this story: John Liu at jliu42@bloomberg.net