Last week, an array of leaders from several African countries participating in China’s Belt and Road Initiative (BRI) were in Beijing to attend the Belt and Road Forum, which was from April 25-27 2019. President, Xi Jinping of China, announced at the end of the forum that more than US$64 billion worth of deals were signed during China’s Belt and Road Initiative forum. He further emphasised that market principles would guide all BRI cooperation projects.
On the sidelines of the forum, President Xi met with several African leaders including Kenyan President Uhuru Kenyatta and Ethiopian Prime Minister Abiy Ahmed. Ethiopia and China also announced the signing of several agreements, which included a $1.8 billion agreement between Ethiopia and the State Grid Corporation of China to provide electric transmission and distribution equipment. China also announced that it intended to write off debt for all interest-free loans matured until the end of 2018 provided to Ethiopia.
Unveiled by Xi in 2013, the Belt and Road Initiative, was criticized heavily by western countries for having created “debt traps” to countries who borrowed money from China for their infrastructure projects but then failed to manage them commercially.
Despite this criticism, many African and Asian countries have substantially benefited from China’s renewed investment in infrastructure, enabling those governments to focus on social development programmes.
During this Forum, China has highlighted that it seeks to improve commercial returns, realize economic benefits and ensure sustainability in cooperation with its African and Asian counterparts. Moreover, an emphasis was placed on Chinese corporations (by China) to respect local laws and culture, and to fulfill the local requirements of environmental protection and social responsibility and sustainability.
In addition, China’s Ministry of Finance launched a Debt Sustainability Framework for Low-Income Belt and Road Countries and encouraged international financial institutions to voluntarily use it. The framework enables developing countries to analyze the financial sustainability of their Belt and Road projects. This initiative showed China’s commitment to help Belt and Road Countries resolve their debt problems.
To date, Chinese financial institutions have provided US$440 billion for infrastructure projects along the Belt and Road countries, with 11 Chinese banks having set up 76 country-level institutions in 28 Belt and Road countries, while 50 banks from 22 Belt and Road countries have set up their branches in China as of the end of last year. Further attempts are being made to jointly set up financing systems with other countries’ banks and finance ministries.
In his opening speech at the Forum, President Xi Jinping said, “We don’t chase a trade surplus and are willing to import more competitive and high-quality agricultural products, goods and services, promoting a balanced trade,” adding that the world’s second-largest economy would increase its efforts to protect the intellectual property rights of foreign companies in China and promote technological exchanges under legal principles.
This statement comes amidst widespread criticism of the trade war between the United States and China. Since 2018, the United States has increased tariffs on Chinese goods, and despite attempts at negotiating terms to settle the dispute, the trade war has morphed into a tech-war, with the United States rejecting and actively campaigning against Chinese companies, such as Huawei.