China has recently declared another round of write-offs on interest-free loans for over two dozen African nations. However, analysts indicate that this relief only addresses a minor portion of the total debt burden faced by these countries.

During the Forum on China-Africa Cooperation (FOCAC) summit held in the Chinese capital last week, Beijing announced the cancellation of intergovernmental interest-free loans owed by 33 African nations, which are due by the end of this year.

The forgiveness of interest-free loans is a common practice at FOCAC; two years ago, China forgave 23 loans that had matured in 2021 for 17 African countries. These loans are provided by the China International Development Cooperation Agency, which is responsible for Beijing’s foreign aid initiatives.

However, they represent only a small fraction—approximately 5 percent—of the total loans extended by China to African nations, as noted by observers. The majority of these loans originate from China’s policy banks, such as the China Exim Bank and China Development Bank, and primarily support projects under the Belt and Road Initiative, which aims to enhance global trade and infrastructure connections.

For these loans, Chinese banks, including policy lenders, are more inclined to extend repayment periods, introduce new grace periods, or refinance loans for borrowers in distress, rather than reducing the principal amount.

Deborah Brautigam, a professor emerita in international political economy at Johns Hopkins University’s School of Advanced International Studies, described China’s decision as a “symbolic gesture.” She noted that this action pertains solely to the unpaid balances of these 20-year loans, which many governments often regard as grants, given that China has been writing them off since 2000.

According to data from Boston University on 199 of these interest-free loans from 2000 to 2023, Brautigam highlighted that the largest write-off occurred in 2007, when China canceled approximately US$715 million in overdue principal.