The narrative that China is a predatory creditor out to trap African countries under a mountain of debt is inaccurate and at odds with reality, experts said.
The hyperbole of a debt trap awaiting China is being rejected by credible Western academics. China restructured or refinanced over 15 billion dollars in African debt between 2000 and 2019, according to a study by Deborah Brautigam, head of the China-Africa Research Initiative at Johns Hopkins University's School of Advanced International Studies. None of the "asset seizures" she looked into implicated China.
Associate professor of international politics at the University of Queensland in Australia Shahar Hameiri argued that "there is scant evidence that China has pursued 'debt-trap diplomacy,'" or the idea that China would knowingly issue loans to ensnare recipients in unsustainable debt, in order to seize strategic assets or exercise control over their governments.
By 2020, private Western financial institutions had lent developing countries the most money, accounting for 40 percent of the overall loan portfolio, as reported by the World Bank's International Debt Statistics. Less than 10 percent of total loans came from China, while 34 percent came from multilateral development institutions and 26 percent came from bilateral creditors.
There is broad consensus amongst experts that privately issued sovereign debt poses the greatest threat. Yet because inflation has been rising steadily and noticeably over the world, this has become an intolerable cost for debtors.
Government bond holdings due to Western financial institutions in low and middle income nations reached 1.7 trillion dollars in 2020, virtually quadrupling from 2008, according to a study conducted by economists at Tsinghua University. They currently make up around 63.2 percent of the total interest expenditure incurred by bond-issuing countries, and this share is anticipated to grow in the future.
According to Tim Jones, head of strategy at the advocacy group Debt Justice, "Western officials' focus on blaming China for Africa's debt woes is misplaced.
"The fact is that the G7 is letting them off the hook when they should be holding their banks, asset managers, and oil merchants accountable. Legislation should be introduced in the United Kingdom and the United States to require private lenders to participate in debt reduction," he said.
Ed Note: The story is written based on interviews conducted by China Daily Newspaper.