China to encourage its companies to invest more in Africa

China would encourage its companies to invest no less than $10 billion in Africa over the next three years, amid efforts to assuage concerns over Chinese investments in the region. Addressing the Eighth Ministerial Conference of the Forum on China-Africa Cooperation (FOCAC) virtually on Monday. President Xi Jinping said that China will set up a China-Africa cross-border yuan center to provide African financial institutions with a credit line of $10 billion. China's total imports from Africa, one of its key sources of crude oil and mineral supply, will reach US$300 billion in the next three years, Xi said, adding that the two sides would cooperate in areas such as health, digital innovation, trade promotion and green development. “China has been Africa’s largest trade partner for 12 years in a row, and China-Africa trade hit a historical high of $185.2 billion in the first nine months of this year, up 38.2 percent year-on-year, while its investment in Africa was $2.59 billion, up 9.9 percent, surpassing that in 2019 before the pandemic,” state media said quoting Chinese Commerce Ministry data.

The announcement comes amid alarm over what is described as China’s “debt trap” diplomacy. China has been accused by Western countries of luring poor countries into "debt traps" which they are unable to repay. Cash-strapped countries have been pushed to stake sovereign assets such as airports and seaports to access credit under onerous loan terms.The latest concerns and allegations are about Uganda that China may take over Uganda's only international airport if the east African country fails to service a $200 million loan which it took for the expansion of the facility. African media reported that a parliamentary probe in Uganda last month concluded that some of the unfavourable provisions in the loan agreement, if not amended, expose Uganda’s sovereign assets to attachments and take-over by Beijing. This sparked public outrage in Uganda which secured this loan in 2015 from China's Exim Bank, in which it waived the sovereign immunity on airport assets to secure the deal.The agreement also requires any dispute arbitration or court proceedings to take place in China under Chinese law. Request from Uganda this year to renegotiate the loan terms had been rejected by China’s Exim Bank. Both China and Ugandan authorities denied any such concerns of looming danger of takeover of the airport.
Observers are taking these statements with a pinch of salt, which they say are aimed more at cooling off tempers during the ongoing FOCAC meeting. They are in wait and watch mode referring to Chinese actions in the past regarding the interpretation of the agreements for example in Hong Kong, in Sri Lanka etc. among others. In a similar situation, Sri Lanka was forced to surrender its Hambantota Port to Beijing on a 99-year lease after it failed to repay the loans taken to build it. Pakistan, a debt-ridden country under FATF grey list is also in the clutches of Chinese loans to the extent that it resorted to Chinese loan to serve another loan. There have been reports in media about growing resentment against China-funded projects in Pakistan specially in Gwadar region in Baluchistan.
There have been reports about continuing backlash against Chinese mining companies in Africa. These have been attacked and Chinese nationals killed and kidnapped in Democratic Republic of Congo (DRC) in recent weeks. As per media reports, local authorities in DRC said some Chinese firms are operating illegally without licenses. The governor of South Kivu province also suspended the operations of six Chinese companies, ordering all local and foreign staff to leave the sites. According to media reports, President Felix Tshisekedi is reviewing a $6 billion "infrastructure-for-minerals" deal with Chinese investors signed under previous president Joseph Kabila. Other than DRC, Chinese nationals have been kidnapped in other African countries as well like Mali, Nigeria etc. in recent months.