Monday, February 1, 2010

China pledges $10bn in loans to Africa

By Barney Jopson in Sharm el-Sheikh

Published: November 8 2009 14:14 | Last updated: November 8 2009 18:59

Wen Jiabao, China’s premier, has pledged $10bn in new low-cost loans to Africa over the next three years and defended China’s engagement against accusations it is “plundering” the continent’s oil and minerals.

Mr Wen’s pledge at a China-Africa summit in Egypt on Sunday came as he urged the US to keep its deficit at an “appropriate size” to ensure the “basic stability” of the dollar.

China is the biggest holder of US government debt and Mr Wen was reinforcing comments he made in March when he expressed concern that Washington’s deficit would erode the value of its US dollar assets.

The loan pledge was double a commitment made in 2006 and came during a summit at which delegates from both sides stressed their ties go beyond the Chinese acquisition of raw materials.

Mr Wen told a press conference: “There have been allegations for a long time that China has come to Africa to plunder its resources and practice neo-colonialism. This allegation in my view is totally untenable.”

Trade between China and Africa jumped 45 per cent to $107bn in 2008, a tenfold increase since 2000, and the new loans are likely to sustain the expansion.

But Beijing has drawn criticism that Chinese finance, which comes without political conditions, props up unsavoury regimes in Zimbabwe and Sudan and fuels corruption.

Mr Wen said eight new policy measures were “more focused on improving people’s livelihoods” than a 2006 package, underlining what he called Beijing’s “selfless” engagement in Africa.

The International Monetary Fund has expressed concern about African governments taking on too much debt from Chinese lenders. But Mr Wen said China would write off some loans to the poorest and most heavily indebted countries.

African heads of state at the summit, including Robert Mugabe of Zimbabwe and Omar al-Bashir of Sudan, lauded China’s support.

But several delegates said African governments should devise their own development plans to take full advantage of Chinese finance.

Paul Kagame, president of Rwanda, said: “The onus is on us leaders, government and the private sector especially to fully engage at every stage and . . .  articulate our development priorities in this partnership.”

Additional reporting by Jamil Anderlini in Beijing

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