China’s waiver of interest-free loans to Africa equal to or less than 1% of its loans to the continent

China’s foreign ministry said in August it had canceled 23 loans to 17 African countries that were due in 2021, but gave no further details.

The canceled loans were for 10 to 30 years and were worth up to $610 million in total, researchers at Boston University estimated, using a database of Chinese state loans compiled by the researchers.

China has waived some loans to African countries since 2000 when it canceled loans made in the 1980s and 1990s, although it generally takes a tougher stance on restructuring loans to developing nations as part of its Belt and Road initiative (BRI) launched in 2013, analysts said.

Chinese public creditors pledged $53.8 billion in loans to Africa between 2000 and 2012, according to the Boston University database, which tracks loans made since 2000, so canceled loans last month represent only a tiny part.

“The granting and cancellation (of interest-free loans) are important diplomatic and symbolic tools in China’s lending practices,” says the report, authored by Jyhjong Hwang and Oyintarelado Moses.

They add that these loans “are more akin to instruments of foreign policy than financial instruments based on results”.

China’s interest-free loans to Africa, which have paid for government buildings, stadiums and hospitals, among others, are generally treated as grants, researchers and African government officials say.

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