So-called 'net extractor' narrative a rehash of 'debt trap' argument

Every time cooperation between China and Africa reaches a new height in its development, Western media inevitably rush in to criticize and disparage the partnership.

Recently, following China's expansion of its zero-tariff treatment to cover all 53 African countries with which it has diplomatic ties, some Western media outlets and think tanks, motivated by envy and a Cold-War mentality, have coined a new term: "net extractor." They claim that China has shifted from being a "loan provider" to a "debt collector," allegedly "siphoning" assets from Africa.

At first glance, the "net extractor" label may appear novel, but upon closer inspection, it is simply a recycled version of the old "debt trap" argument. This reasoning treats routine loan repayment as "net extraction," ignoring the fundamental rules and principles of financial cooperation. Loan issuance and repayment are processes governed by mutually agreed contracts and follow natural repayment cycles.

Statistics indicate that China's lending to Africa peaked between 2013 and 2018, and the repayment of principal and interest is now underway. To portray the normal financial flows as "interest extraction" is a deliberate misrepresentation aimed at sowing discord in China-Africa relations. If this spurious "net extractor" argument were valid, would it also apply to World Bank or IMF loans—or even to everyday loans, such as mortgages or car loans? Clearly, the argument does not hold water.

The so-called "net extraction" narrative also reflects a narrow and selective perspective. Its proponents focus exclusively on African countries' current loan repayments while ignoring China's massive direct investment, project contracting, and trade financing in the region. They conveniently overlook the tangible improvements Chinese investment has brought to Africa, including railways, bridges, and other infrastructure, as well as improvements in living standards.

By the end of 2023, China's direct investment stock in Africa had exceeded $40 billion, making it one of Africa's largest foreign investors. Since 2013, China has participated in constructing over 6,000 kilometers of railways and more than 6,000 kilometers of highways, built and upgraded roughly 150,000 kilometers of telecommunications backbone networks, and invested in and operated more than 1,600 manufacturing and agricultural projects, alongside nearly 340 mining processing projects, in Africa. These projects have injected fresh vitality into Africa's economic development. The benefits of China-Africa cooperation are visible, tangible and directly felt by ordinary people across the region.

Western countries bear significant responsibility for Africa's large external debts. In the 1960s and 1970s, many African nations faced severe capital shortages during early industrialization and borrowed heavily from Western nations and Western-controlled financial institutions. Subsequently, falling prices for primary commodities and trade barriers imposed by Western countries worsened Africa's export conditions, creating imbalances in international payments and reducing repayment capacity. To manage these difficulties, African countries often borrowed new loans to pay off old ones, and high interest rates caused external debt to snowball. Between 1970 and 1987, Africa's total external debt surged from $8 billion to $174 billion.

According to World Bank data, of the total external debt exceeding $1 trillion held by 49 African countries, about three-quarters is owed to multilateral institutions and non-Chinese private creditors. A report by Debt Justice indicates that 35 percent of Africa's external debt comes from Western private lenders, which is nearly three times the amount lent by China, with average interest rates approximately double those of Chinese loans.

Tim Jones, head of policy with Debt Justice, said that Western leaders blame China for debt crises in Africa, but this is a distraction. The truth is their own banks and asset managers are far more responsible.

Recently, Aliko Dangote, president of the Dangote Group, one of Africa's largest industrial conglomerates and Africa's richest person, told Nicolai Tangen, CEO of Norges Bank Investment Management, that China is helping Africa most in business, and Chinese companies have succeeded by backing their businesses with strong state-supported financing structures that make it easier for African investors and governments to execute large projects. He added that Chinese suppliers often provide equipment on credit backed by export insurance institutions, allowing African businesses to spread payments over several years rather than paying upfront.

Since May 1, China has extended its zero-tariff policy to all 53 African countries with which it maintains diplomatic relations, opening up the Chinese market as a significant development opportunity for Africa. It is now apparent who is genuinely "creating economic lifeblood" for Africa and who is merely "extracting" it.

He Wenping is a researcher at the Institute of West-Asian and African Studies, Chinese Academy of Social Sciences