Firms told to back African loans, improve business environment

The China Chamber of International Commerce has called on its member companies from both private and State-owned sectors to improve their commercial credit systems in Africa, in order to help foster business development in the region.

Officials and experts said that even though many Chinese companies have built a strong presence in Africa, particularly in sectors such as infrastructure, power generation, agriculture and other service businesses, it is time for firms to up their credit facilities, support lending platforms, and deploy more resources.

Sun Xiao, director of the multilateral cooperation department of the Beijing-headquartered CCOIC, said China's move to establish a credit system is admirably in tune with its efforts to enhance market order, and create a favorable business environment.

His words were echoed by Lu Ming, president of the Academy of China Council for the Promotion of International Trade, who said: "Business credit is an essential non-institutional pillar of a good business environment, especially as the establishment of an ideal market economy system with integrated laws and regulations is still ongoing in China."

According to a recent State Council meeting, the Chinese government is to support healthy lending with a raft of measures. It will establish a credit-centered regulatory system to improve the business environment; create a blacklisting mechanism for credit defaulters; and resolutely deal with law violations including infringement, counterfeiting, cheating in the marketplace and fraudulent advertising. It will also look to safeguard information, trade secrets and individual privacy.

In 2017, China's trade promotional agencies and government branches carried out 8,300 activities to help encourage business integrity, including educational activities, theme days and exhibitions, reaching 11.6 million people.

Liu Guijin, the former Chinese ambassador to South Africa and China's first special representative on African affairs, called for China and Africa to do more to deepen their understanding of each other, especially in the area of trade and investment. He said Africa does not know much about China, and China's knowledge about Africa is also shallow.

"It is therefore imperative that the business communities on both sides stay united, as many Chinese companies want to establish country branches, and seal more deals in Africa in the longterm," he said. "A better-developed commercial credit system certainly can help them win the trust of their African partners, local communities and consumers."

Meanwhile, some have argued that loans from Chinese firms to African countries have fueled their debt burdens. But He Wenping, a senior researcher at the Chinese Academy of Social Sciences, said the debts have mostly accumulated over a long period of time, and that China is not a main creditor of African countries. She said China has always paid attention and sought solutions on Africa's debt sustainability.

"China's financing support to Africa is mainly invested in infrastructure construction and the field of production, which has greatly improved the environment for Africa's economic development, added to its appeal to foreign investment and enhanced its capability to achieve self-driven development," she said.