Passengers travel on a train along the Mombasa-Nairobi Standard Gauge Railway, built mainly with funds from the Export-Import Bank of China (WANG TENG)

China and African countries enjoy a long history of friendship and cooperation, which can be traced back hundreds of years. The China-

Africa relationship has witnessed exponential growth since 2000 when the Forum on China-Africa Cooperation (FOCAC) was founded with the aim to strengthen bilateral friendly cooperation and promote common development under the framework of South-South cooperation. .

In addition, the Belt and Road Initiative, launched by the Chinese Government in 2013 to enhance connectivity among the countries along the Silk Road Economic Belt and 21st Century Maritime Silk Road, has received a positive response from African countries. This has led to a series of cooperation projects such as the Mombasa-Nairobi Standard Gauge Railway (SGR) in Kenya and the Djibouti International Free Trade Zone. To date, China has signed MoUs on Belt and Road construction projects with 37 African countries.

However, during this process, diverse views have been expressed on the China-Africa economic cooperation and the Belt and Road Initiative. These views include not only pragmatic and constructive suggestions, but also negative criticisms that smear China-Africa cooperation. Among these, the so-called China's "debt trap" in Africa has been mentioned frequently, creating a negative perception in the Western world and African countries. The so-called "debt trap" theory claims that China tries to control African politics and wealth by setting a "debt trap" under the name of economic and trade cooperation. But such a theory is totally baseless.

Actually, the proponents of the theory ignore the commercial motives behind China's investment and the complexity of factors that lead to African debt.

For a long time, many Westerners, including some African elites with Western education background, have had misconceptions about China's state-owned enterprises (SOEs), which invest heavily in Africa. They mistakenly believe that China's SOEs are nothing but the economic tools of the Chinese Government, with no consideration given to their operation costs, profits or labor productivity. According to them, the only aim of China's SOEs is to get as much strategic resources as possible.

For instance, a report in The New York Times illustrated how the Western media surmise China's investment in the international market. According to the report, unlike the executives of Western oil giants such as Exxon Mobil, the Chinese SOEs happily accept the strict terms of oil contracts, which yield only minimal profits.

"Chinese companies do not have to answer to shareholders, pay dividends or even generate profits," claimed the self-righteous report.

But actually, a growing number of China's SOEs are listed in the stock markets worldwide and are issuing bonds. In addition, the SOE supervision and administration authority of the Central Government has a strict performance assessment system and accountability mechanism for SOEs. Thus, China's SOEs must consider operation costs and profits while planning investments overseas.

It is true that compared with private enterprises in the West, China's SOEs are more willing to undertake projects with high risks while investing in African countries. But there are various reasons for that, including support to the long-lasting China-Africa friendship, saturated markets and high labor costs in the developed countries, and the huge development potential in the developing countries. It is totally wrong to say that China's SOEs do not need to consider costs or profits while investing in Africa.

More importantly, China's investment in Africa is not monopolized by SOEs, and private companies account for quite a large share. According to a research report by Standard Bank Group Ltd. released in August last year, more than 500 Chinese-funded enterprises are operational in Uganda, employing more than 25,000 local residents. Based on this, the total number of Chinese companies operating in Africa may exceed 30,000, most of which are small-sized private companies. Private companies pursue profits and do not have the financial capacity to incur unnecessary losses, or create the so-called "debt trap."

Even for the SOEs, they also need to consider investment returns and adjust their investment tactics according to market changes, as demonstrated by several cases. The Export-Import Bank of China provided 90 percent of the loans for the construction of the Mombasa-Nairobi SGR line in Kenya. According to the loan contract released by the local media, the bank has paid special attention to interest on loans by designing a precise repayment mechanism so as to ensure loan safety. The contract also contains clauses that encourage shipping goods from the Mombasa Port by railway. This shows that China's SOEs, like private companies, abide by the rules of the capital market.

In fact, the debt problem in Africa has quite a long history, and China's involvement is comparatively low.

Owing to the backward infrastructure, rapid population growth and rising public expenditure, some African governments have relied on international lending for a long time. In the 1990s, some African countries were even on the brink of bankruptcy and, in order to survive, they had to carry out economic reforms with help from the World Bank and the International Monetary Fund. However, the debt problem has resurfaced in recent years and more than 20 African countries are now in medium or heavy debt. Borrowing in foreign currencies, appreciation of the U.S. dollar and the rise of interest rates are the main reasons behind the deterioration of the African debt problem.

In addition, many international financial experts and the UN officials for African affairs have on many occasions refuted the claim that China is creating a "debt trap" in Africa. Vera Songwe, Executive Secretary of the UN Economic Commission for Africa, in an article for Financial Times, wrote that "while some analysts link rising debt levels with lending by China, Chinese liabilities in fact account for less than 10 percent of Africa's total external debt." William Gyude Moore, a former Minister of Public Works in Liberia, also noted that China's $115 billion credit to Africa between 2000 and 2016 is still less than 2 percent of the total $6.9 trillion of low- and middle-income African countries' debt stock.

It is true that various problems and misconceptions have emerged during the process of China-Africa economic cooperation, due to the differences in politics, culture, economic systems and development stages. The Chinese and African governments and enterprises never abstain from serious and reasonable criticism in this regard, and are making efforts on self-rectification and improvement. However, the so-called "debt trap" claim is far more than criticism; it is a wrong conception with a strong political motive to smear China-Africa cooperation.

(Comments to niyanshuo@chinafrica.cn)