The China Africa Research Initiative (CARI) has issued a Debt Relief Dashboard that sheds light on official information about Chinese debt relief during the COVID-19 pandemic [Tracking Chinese Debt Relief in the Covid-19 Era]. China has extended debt relief to developing countries worth a combined $7.6 billion in 2020 and 2021. Two of the Chinese policy banks that have participated in debt restructuring have been key lenders for BRI projects in the last eight years - The Export-Import Bank of China (EXIM) and China Development Bank (CDB).
The most affected by those measures have been African countries, with China cancelling interest-free loan debts to fifteen African states. Most notably, Angola will receive at least $6.2 billion in debt relief. The country is the most dependent African state when it comes to Chinese financing, as it has accumulated $43.2 billion of debt through 256 loans since 2000. Other debt relief packages are of smaller size with DRC Congo receiving a relief of $28 million and Botswana of $2.2 million.
As for what can be expected in terms of issuing new loans and projects, it is possible that China manages to keep BRI lending at pre-Covid-19 levels if it wishes to do so. EXIM and CDB are in a position to sustain the 2013-2019 pace if they receive political backing. BRI loans are just a part of China’s overall lending portfolio and if China is willing to pour resources into the BRI, there is certainly a demand for that. As Western economies are still battling the pandemic, a serious outflow of foreign investments has been felt in parts of the developing world. Against this backdrop, China has emerged as the only major economy to have experienced a positive GDP growth in 2020.
Mirela Petkova
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