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Is China really to blame for Zambia's debt problems?

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Zambia's public debt has increased significantly in recent years, and concerns over a possible crisis have lately attracted the attention of Western media. On September 3, a report by British business intelligence outlet Africa Confidential warned of escalating debt caused by allegedly unsustainable Chinese loans and claimed that Zesco, the state-owned national electricity company, has been in talks about a takeover by a Chinese company.

The Zambian government refuted the allegations and denied the existence of plans for Zesco's privatisation.

The allegations coincided with increased Western concern over the expansion of Chinese loans to African countries. Two weeks after the UK froze its aid to Zambia following an investigation into large-scale corruption in a Social Cash Transfer programme it supported, other donors (Ireland, Finland and Sweden) did the same.

In early August, 16 US senators, led by Trump loyalist David Perdue, sent a letter to the US Secretaries of Treasury and State, to warn against China's use of "debt-trap diplomacy" to advance the Belt and Road Initiative and create a world economic order centred around the Asian superpower.

The senators wrote that China pumps large loans for infrastructure projects into countries in Africa, Asia and Europe with the explicit purpose of leveraging the debt to influence national policies and gain control over strategic assets and resources. Their letter expressed concern over the role of the International Monetary Fund (IMF) in bailing out countries indebted to China and called for decisive action to stop the Chinese "hegemonic" project.

However, the reality of Zambia's debt tells a different story: China is not the only major player. As the Economist magazine wrote in September, China probably holds a quarter to a third of Zambia's external debt. In recent years, Zambia joined several other African countries in borrowing US dollars through large bond sales (known as eurobonds) on international markets controlled by Western institutions.

The government issued three eurobonds between........

© Al Jazeera