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Economic Implications Of Loan Agreement By China To South Africa

Critics cite the example of a loan granted by Exim Bank of China to the Sri Lankan government to build the port of Magampura Mahinda Rajapaksa[82] and Mattala Rajapaksa International Airport, as an example of debt trap diplomacy. China`s state-owned China Harbour Engineering Company and Sinohydro Corporation were commissioned to build the Port Magampura for $361 million, 85 percent financed by Exim Bank of China at an annual interest rate of 6.3 percent. [83] Due to Sri Lanka`s inability to repay the port`s debt, it was leased in 2017 to merchants Port Holdings Company Limited, on behalf of a 99-year lease. [84] This has raised concerns in the United States, Japan[35] and India about using the port as a Chinese naval base[85] to contain Chinese geopolitical rivals. The monthly accounts were kept and cross-checked by the People`s Bank of China on the Chinese side and by the Ministry of Finance of Guinea, fixing the loan payments to other Guinean ministries: public works, agriculture, energy and energy, social services, etc. When Guinea decided which projects it intended to finance with these loans, the Chinese brought in a Chinese team of qualified personnel and carried out feasibility studies (p.131) (the cost was shared by both parties). If the project seemed feasible — and in the Chinese eyes of the Mao era, and even later, it was usually technically, not economically feasible — the Chinese and their colleagues in the Guinean ministry would build a bridge, develop an agricultural project, etc. In 1995, China Eximbank granted Equatorial Guinea its first eight granting foreign aid loans, including at least one $5.75 million loan in Africa. Over the next two decades, china Eximbank opened branches in Morocco (for West and North Africa) and South Africa (South and East Africa). In 2017, according to our data, China Eximbank had signed at least 559 loans worth a total of $75.7 billion in forty-four African countries (including separate projects from a single line of credit). Based on the evidence we have seen, China Eximbank appears to be responsible for fulfilling FOCAC`s commitments with respect to concession loans, preferential loans and other lines of credit.

Between 2012 and 2016, the bank made an average of $9 billion a year in loan commitments. Several infrastructure projects financed by Chinese loans are believed to have had a positive impact on the economies of many African countries through infrastructure development. [51] Infrastructure improvements through these loans cover roads, railways and ports. [51] Improved infrastructure promotes internal trade, health and education systems. [51] An example of infrastructure development is the Merowe Dam in Sudan for hydropower generation. [51] In Guinea too, the Chinese have begun their first discussions on the financing of a railway in Africa. It is common knowledge that one of the flagship projects financed during the Mao period by Chinese loans was the Tazara Railway, built between 1970 and 1975, which allowed Zambia to export its copper to Europe via Tanzania, without using the british-built railway controlled by South Africa. then white. However, few people remember that in the 1960s, China, Guinea, and Mali began planning a 360-kilometer-long railway that would allow Mali more direct access to the sea by extending the French colonial train from Bamako, Mali`s capital, to kankan, where it would join the Guinean rail system.

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