China cautious in lending as it says it “won’t hawk” loans to Kenya amid concerns about possible defaults.
China emphasizes its cautious approach to lending amid worries about potential defaults by stating that its stance on loans to Kenya and the rest of the continent will depend on borrowing requests from individual nations.
Zhou Pingjiang, the Chinese ambassador to Kenya, stated at a news conference on Monday that Beijing would not be hawking any loans but rather would wait and carefully consider any requests from capitals in Africa before approving any loans.
“Going forward, the priority of our cooperation will be decided by the two sides. For the Chinese style of doing things, the priorities of our partners have always been our priorities,” Mr. Zhou said in Nairobi.
“We are willing to listen, we are willing to engage and we are willing to improve.”
The envoy spoke a day after China’s Communist Party (CPC) ended it’s National Congress, endorsing President Xi Jinping for an unprecedented third term that has drawn comparisons to the rule of modern China’s founder Mao Zedong.
Every five years, the Party Congress, which only occurs once, approves the nation’s policy goals.
President Xi wants to ensure that Beijing imports as much as it exports to the 140 nations around the world, according to Mr. Zhou, the Chinese ambassador to Kenya.
“The current trade is a natural outcome of the market operation. We do not encourage a trade deficit and we are making incentives to encourage more exports of Kenyan products to China. We understand there are concerns about this issue but we are working very hard to facilitate trade exports,” he said, referring to China’s current status as mostly the exporter to its trading partners.
Kenya has been negotiating with China to increase exports of products such as frozen avocado to the Chinese market.
Under President Xi, who has been in power since 2012, China has grown to become Africa’s biggest bilateral lender and trading partner and the world’s second-largest economy.
But there have been incessant questions about whether Beijing will adjust its lending, especially after some countries became too indebted. Beijing disbursed some $153 billion to Africa’s public institutions between 2000 and 2019, according to official data, with most of the money going to infrastructure in countries that have signed up on the Belt and Road Initiative (BRI).
Kenya owes about Sh700 billion to Chinese lenders.
Chinese loans to the East African nation, however, dropped for the first time in 20 years in June as Beijing adopts more cautious lending in Africa where some nations have reached the limit of their borrowing capacity and the prospect of default looms.
This comes at a time when the World Bank and the International Monetary Fund (IMF) have stepped up lending to Kenya, firming the institutions’ grip on the country’s economy.