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Africa: Germany fears a new debt crisis

L’The influx of long-term loans granted by China to poor countries, particularly in Africa, poses “a serious danger” of seeing the world plunge into a new financial crisis, German Chancellor Olaf Scholz warned on Friday. While dn many economies are still reeling from the impact of the Covid-19 pandemic, which has heightened financial stress, some of these countries, such as Sri Lanka and Zambia, have at the same time benefited from large loans Chinese. Former Chinese central bank governor Zhou Xiaochuan acknowledged at a conference last month that there were debt problems in partner countries, without citing any.

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The debate over Chinese loans revived

“There is a really serious danger of seeing (trigger) a next big debt crisis in the countries of the South linked to the loans granted by China, which itself does not have an overview because of the many actors involved,” said the Social Democratic Chancellor during a debate at the Congress of Catholics being held in Stuttgart. During this congress, he was challenged on the fact that Europe had remained behind while Chinese money built roads and African universities, thus increasing Beijing’s influence on the continent. “It would plunge China and the countries of the South into a great economic and financial crisis and, moreover, would not spare the rest of the world,” insisted the leader. “So this is a serious concern. »

Ongoing negotiations

China has long been accused by the West of using the “debt trap” to exert influence over other countries. The argument is that China lends money long-term to other states, which end up having to cede control of key assets if they cannot repay it. Beijing rejects these accusations, arguing that its loans are aimed at alleviating poverty.

Scholz said he wants to convince China to join the Paris Club, an informal group of official creditors whose role is to find coordinated solutions to countries’ payment difficulties, by negotiating relief or rescheduling of their debt. “One of the great ambitions we have is to integrate China” into this club, he said. To counter Chinese influence, the European Union unveiled a development aid plan called “Global Gateway” a few months ago, he recalled. In this context, the EU intends to invest more than 150 billion euros in Africa over the next few years in infrastructure, transport and renewable energy projects. The initiative is seen as the European response to the “New Silk Roads”, the vast Chinese program of loans in dozens of countries in order to develop ports, roads, railways or digital infrastructures.

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