OPINIONS Observer: 'Blood cell finance': A new development model for China-Africa cooperation

OPINIONS

Observer: 'Blood cell finance': A new development model for China-Africa cooperation

By Zhang Jian | People's Daily app

13:12, September 04, 2018

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As China and Africa work together to bring their time-honored friendship to the next level, there are some disturbing voices in the international community warning that the continent faces the risk of a "debt trap" after receiving financial support from China.

Cheng Cheng, a researcher at the Chongyang Institute for Financial Studies at Renmin University of China, coined the concept of "blood cell finance" to illustrate the financial aid offered by China to support African countries' development.

"Blood cell finance" is defined as seeking to adopt financial tools to support large-scale infrastructure and industrial projects in African countries.

China is leveraging its financial and industrial power to promote the development of African countries. China follows the rule that the cooperating nation’s fiscal burden will not be too high and both countries' own development will be promoted, so as to enhance win-win cooperation for common development between China and African countries.

Grant and low-interest loans are important part of China's practice of pro-development financial aid in Africa.

Back in the late 1960s and early 1970s, China began to provide aid to African countries to set up projects delivering real benefits to local people and the economy. For example, to build the Tanzania-Zambia Railway, China provided about 1 billion yuan and sent more than 50,000 engineers and technicians.

As a developing country, China delivered the aid under the United Nations' South-South cooperation framework without any political conditions attached.

Grant only accounts for a small proportion of China's "blood cell finance" model. Most of the aid is in the form of loans. China has provided preferential loans to African countries to improve their infrastructure, which African countries prefer most.

African countries can use their own resources in place of preferential loans to achieve mutual benefits and common development. The international community calls this cooperation model "resources for infrastructure."

In 2004, the Export-Import Bank of China, a major Chinese institutional bank that promotes national policy, provided $2 billion in preferential loans to Angola after Africa's second-biggest oil producer turned down the conditions the International Monetary Funds attached to the loan Angola requested.

Supported by China's "blood cell finance," Angola has developed rapidly, and has becoming one of China's most important trading partners in Africa. Angola's vigorous development of its oil export industry is also conducive to the development of China-Africa economic and trade cooperation.

The "blood cell finance" model also includes financial support for development and equity investment. For example, differentiated from preferential loans for infrastructure construction, China Development Bank (CDB) provided various financial support options to boost the production of African countries.

CDB has provided a loan of $580 million for the two-phase construction of the Sunon Asogli Thermal Power Station in Ghana, injecting new economic vigor into to West Africa, which has long been plagued by power shortages.

Chinese top leaders have reiterated that China will never pursue a colonialist path like some countries did, or allow colonialism, which belongs to the past, to reappear in Africa.

Practice has proved that as a new development and cooperation model, "blood cell finance" has promoted mutual benefit between China and African countries. Through the "blood cell finance" cooperation model, China and Africa will develop "toward an even stronger community with a shared future through win-win cooperation."

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