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China's links to Africa grow, with pledge of $10-billion in preferential loans

In the latest dramatic boost to its African expansion, China is pledging $10-billion (U.S.) in preferential loans to Africa, along with 100 clean-energy projects and lower customs duties on up to 95 per cent of African exports.

The low-interest loans, earmarked for social programs and infrastructure development in Africa over the next three years, announced yesterday at the latest China-Africa summit, are twice as big as China pledged in 2006 at the last such summit.

"Whatever change may take place in the world . . . our policy of supporting Africa's economic and social development will not change," Chinese Prime Minister Wen Jiabao told officials from 49 African countries at the Egyptian resort town of Sharm el-Sheikh.

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The rapid growth in China's investment and trade in Africa has provoked controversy across the continent, but it is undoubtedly successful. China's annual trade with Africa, a mere $2-billion in 1999, soared to an astonishing $107-billion last year, allowing China for the first time to rival the United States as the continent's biggest trading partner.

The growth in China-Africa trade last year alone was 45 per cent. Chinese investment in Africa, meanwhile, reached almost $8-billion last year, primarily in the energy and mining sectors.

But that trade and investment is also generating unease and criticism, especially on questions of human rights. Last month, just weeks after Guinea's soldiers killed more than 150 people and raped scores of women in public, China struck a $7-billion mining deal with Guinea's repressive regime.

The deal would allow a Chinese company, China International Fund, to gain access to Guinea's wealth of mineral resources, including bauxite, diamonds and gold. The deal has been criticized by human-rights groups, since it could help to prop up a brutal dictatorship, but China has refused to give any details of the deal.

China has also become a major economic ally of controversial regimes in Sudan, Angola, Zimbabwe, Congo and other African countries. Many of these countries are providing oil or mineral exports to China - a key strategic need for Beijing's economic growth.

Equally controversial is China's impact on labour rights and local manufacturing in Africa. Its exports and investors are often criticized for flooding African markets, squeezing out local competitors, and weakening labour standards.

In countries such as Ethiopia, where Beijing has become a major economic partner, Chinese construction companies are often praised for improving the country's potholed roads. China is also a leading investor in Ethiopia's telecommunications sector. But, at the same time, it is criticized by many Ethiopians for providing surveillance systems that allow the government to monitor the cellphones and e-mails of opposition leaders.

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On the eve of the China-Africa summit, Mr. Wen did his best to deny the perception that China is interested only in Africa's natural resources. He noted that China sent doctors and construction teams to African countries in the Maoist era, when it saw Africa as a potential ideological ally.

China's leading oil company in the continent, Sinopec, is importing only a third as much oil from Africa as the amount imported by the U.S. company Exxon Mobil Corp., the Prime Minister told the state-owned China Daily newspaper.

In addition to the $10-billion in preferential loans, Mr. Wen announced a $1-billion loan fund for small and medium-sized businesses in Africa, and he pledged to continue the cancellation of debts to China by the least-developed African countries.

He also promised to phase in a zero-tariff treatment for 95 per cent of products from Africa's least-developed nations, beginning with 60 per cent of products next year. And he promised that China would build 50 more schools in Africa, train 3,000 doctors and nurses, and offer more than 5,000 scholarships.

In the lead-up to the summit, China's state-controlled media have been attacking Western commentators who criticized China's business practices in Africa.

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About the Author
Africa Bureau Chief

Geoffrey York is The Globe and Mail's Africa correspondent.He has been a foreign correspondent for the newspaper since 1994, including seven years as the Moscow Bureau Chief and seven years as the Beijing Bureau Chief.He is a veteran war correspondent who has covered war zones since 1992 in places such as Somalia, Sudan, Chechnya, Iraq and Afghanistan. More

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