China's Xi says funds for Africa not for "vanity projects"

BEIJING, Sept 3 (Reuters) - Chinese President Xi Jinping said on Monday that Chinese funds are not for “vanity projects” in Africa but are to build infrastructure that can remove bottlenecks in the continent’s development.

Speaking at a business forum ahead of the start of a once-every-three-years China Africa summit, Xi said: “Resources for our cooperation are not to be spent on any vanity projects, but in places where they count the most.”

“Inadequate infrastructure is believed to be the biggest bottleneck to Africa’s development,” he added.

Chinese officials say this year’s summit will strengthen Africa’s role in Xi’s Belt and Road initiative to link China by sea and land through an infrastructure network modelled on the old Silk Road with southeast and central Asia, the Middle East, Europe and Africa.

Xi said that the plan, which Beijing has pledged $126 billion for, would help provide more resources and facilities for Africa and would expand shared markets.

Xi was scheduled to address the opening of the summit later in the day.

From 2000 to 2016, China loaned around $125 billion to the continent, data from the China-Africa Research Initiative (CARI) at Washington’s Johns Hopkins University School of Advanced International Studies shows.

It is the most significant contributor to high debt risks in three African countries, Congo Republic, Djibouti, and Zambia, CARI said last week.

In most other nations, traditional donors, multilateral agencies and private creditors held significantly higher portions of debt, it added. The last decade has seen a boom in African Eurobond issuance.

China has denied engaging in “debt trap” diplomacy, but Xi is likely to use the gathering of African leaders to offer a new round of financing, following a pledge of $60 billion at the last summit three years ago in South Africa.

Ethiopia and Zambia, heavy borrowers from China, have expressed desire to restructure that debt, while bankers believe Angola and Congo Republic have already done so, though details are sparse.

But even countries heavily indebted to China say Beijing offers far better terms than Western banks, and that European nations and the United States fail to match its generosity.

Every African country is represented at the business forum apart from eSwatini, self-ruled Taiwan’s last ally on the continent, which has so-far rejected China’s overtures to ditch Taipei and recognise Beijing.

African presidents in attendance include South Africa’s Cyril Ramaphosa, Egypt’s Abdel Fattah al-Sisi, Zambia’s Edgar Lungu and Gabon’s Ali Bongo. (Reporting by Ben Blanchard and Christian Shepherd; Editing by Simon Cameron-Moore)