This year for the first time, the Asian giant has cut down investment pledges from $60 billion to $40 billion, at the recently concluded ministerial level FOCAC meetings held in Dakar, Senegal. This is a worrying sign of the times for the continent. It’s easy to rationalize this drastic reduction as a result of China’s poor economic performance in the wake of the pandemic with China’s GDP growth at 2.3% in 2020, down from 6.0% in a pre-pandemic 2019, but this doesn’t tell the full story.
As Africa’s largest creditor, defaults and risk of defaults from African countries are a major risk to China. For example, Zambia, the first covid-era African country to default on sovereign debt in 2020, owes China $6.6 billion. With African leaders including during the conference calling for debt renegotiation amid weak economic forecasts for the region, tightening of purse strings in Beijing is understandable.