Is China Helping Africa? Growth and Public Debt Effects of the Subcontinent's Biggest Investor
25 Pages Posted: 1 May 2019
Date Written: March 1, 2019
Because of the lack of reliable data, it is difficult to reliably answer the questions that many people are asking about China's activities in Africa: are the modes and magnitudes of Chinese finance creating unsustainable public finance and economic trajectories and — if they are — whose fault is it? Based on the available information and a rough analysis of the match between China's activities and Africa's development demands, we conclude that Chinese finance appears to have helped development on the subcontinent and has not — by itself — jeopardized its public finances: while public debt to GDP ratios have risen in the top ten recipients of Chinese loans, debt to China is generally a small portion of their external public debt. But China’s role in the debt dynamics of some of these countries — that is, the speed at which their external public debt is growing — provides more reason to worry.
Keywords: China, Africa, Sub-Saharan Africa, trade, energy, development finance, debt, transport, FDI
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