SNA (New York) — China’s “debt trap diplomacy” has been widely denounced by both the West and Japan, and it formed an underpinning theme for the latest edition of the Tokyo International Conference on African Development (TICAD VIII). However, the fact of the matter is that G7 countries, not China, are the largest holders of African debt.

A “debt trap” is said to exist when loans are offered in full knowledge that the recipient is unlikely to be able to repay it, thus creating opportunities for the lender to seize control of critical assets, infrastructure, or natural resources.

It is true that China holds a significant amount of Africa’s external debt, accounting, as far as is known, for about 11% of the continent’s total. However, the frequent accusations that Beijing engages in “debt trap diplomacy” are not backed by even a single specific case in which the East Asian nation used debt obligations to seize national assets.

That said, Uganda’s Entebbe International Airport did become a focus of well-publicized debt trap accusations this March when international media outlets claimed that the facility would soon to be seized by Beijing. In the intervening months, it became apparent that the alarming story was not based on fact–China did seek repayment on its loans to the Ugandan government, but the contracts did not include any provisions for Beijing to take control of the vital airport.

In fact, Africa’s debt derives mainly from commercial loans provided by an array of private financial institutions, the overwhelming majority of which are headquartered in the West and Japan. London-based NGO Debt Justice reports, using World Bank data, that Africa owes up to three times as much money to G7 banks, asset managers, and oil traders as it does to China.

Such commercial loans also charge considerably higher interest rates than those issued by China and its banks.

Even with its more costly commercial loans, G7 investments are widely recognized as contributing less effectively to infrastructure development than those of China. Since 2007, Beijing has overseen about US$23 billion of successful Africa infrastructure projects. This figure is about US$8 billion higher than the combined total of similar programs from the World Bank, the US International Development Finance Corporation (DFC), and the European Bank for Reconstruction and Development (EBRD), according to AidData, a research and innovation lab located at the College of William & Mary.

This deficit in loan effectiveness stems from the fact that G7 investment focuses on market stability, lacking the “equity dimensions of growth,” according to Brian Kahn, deputy head of research at the South African Reserve Bank (SARB). In other words, Western capital has been directed toward neoliberal policy objectives such as private sector growth, competition, and deregulation, while undervaluing the continent’s “structural constraints on growth” such as poor infrastructure and education.

None of these basic facts about loans and development in Africa have restrained evidence-poor accusations of Chinese wrongdoing. During his speech to TICAD VIII, Prime Minister Fumio Kishida made deliberate references to the alleged Chinese debt traps, and he asserted that there is a need to protect fledgling African economies from “unfair and opaque development finance.”

Foreign Minister Yoshimasa Hayashi has also framed Japanese investment as serving as a useful bulwark against allegedly-malign Chinese intentions. Speaking at a meeting with African leaders ahead of TICAD VIII, he promised aid that would help them escape from “debt traps,” and then declared, “we should not tolerate destabilization of developing countries.”

The Kishida administration’s fact-free statements about Chinese debt traps appear to be heavily influenced by US policy, whose officials have argued, referring to China, that “too often international infrastructure deals are opaque and coercive. They burden countries with unmanageable debt,” as it was stated by US Secretary of State Antony Blinken while on a visit to Nigeria this August.

China Foreign Ministry Spokesperson Wang Wenbin fired back that Blinken’s comments were “a lie made up by the United States and some other Western countries to deflect responsibility and blame.” He added, “their real aim is to create a ‘narrative trap’ to sow discord between China and other developing countries, impede their cooperation, and disrupt the growth of developing countries.”

Although the debt trap accusations seem to be based on few if any facts–especially when it comes to the issue of seizing African assets and resources–China’s financial involvement on the continent has been subject to some better-founded criticisms. For example, AidData has warned that transparency is indeed weak: African governments may not be reporting the comprehensive totals of loans which they have been receiving from China, creating legitimate concerns about the ultimate financial sustainability of these obligations.

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