Chinese foreign aid

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Chinese foreign aid may be considered as both governmental (official) and private development aid and humanitarian aid originating from the People's Republic of China.

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Chinese official aid - unlike most major nation-state sources of aid - is not regulated and measured under the OECD's protocols for official development assistance (ODA). According to OECD estimates, 2020 official development assistance from China increased to US$4.8 billion. [1] In this respect, the program is similar in monetary size to those of Norway and Canada. China, however, provides a larger amount of development finance in the form of less-concessional loans. [2] The Chinese government represents its aid as characterised by a framework of South-South cooperation and "not interfering in the internal affairs of the recipient countries". [3]

History

Following the establishment in 1949 of the People's Republic of China under the Chinese Communist Party (CCP), China began providing aid to other countries in support of socialist and anti-imperialist causes. [4] An early instance was the donation of CHF 20 million to Egypt 1956 during the Suez Crisis. [4] When China began its foreign aid program, it was the only poor country that was supplying outbound foreign aid, even providing assistance to countries that had a higher GDP per capita than China did. [5]

During the Cold War, China's foreign aid was often motivated by geopolitics, particularly the issue of international recognition of the PRC (as opposed to the Republic of China government on Taiwan). [6] : 105 

From 1956 to 1976, China provided $3.665 billion in foreign aid to the third world. [7] China provided ten percent of these aid funds to Middle Eastern countries. [7]

From 1970 and 1975, China helped finance and build the TAZARA Railway in East Africa, which cost about $500m, and as of 2012 was considered to be China's largest-ever single-item aid project. [8] In 1974 (near the end of Mao Zedong's period as China's leader), aid reached the remarkably high proportion of 2% of gross national product. The proportion declined greatly thereafter although the absolute quantity of aid has risen with China's growing prosperity.

The motivation of aid became more pragmatic and less about promoting ideology. [4] Following the Cold War, China's participation in foreign aid was increasingly motivated by economic interests, especially resource security. [6] : 105 

The China International Development Cooperation Agency (CIDCA) was created in 2018 to help streamline the process of China's foreign aid, in which the ministries of commerce and foreign affairs and the State Council are also involved. [9]

Comparison with ODA

Chinese aid, unlike the aid provided by most developed countries, is not governed by the categories of the OECD's Development Assistance Committee, and is not counted in international statistics as Official Development Assistance (ODA). [9] Rather than being a "donor", China sees itself as working within a framework of South-South cooperation: [3]

China adheres to the principles of not imposing any political conditions, not interfering in the internal affairs of the recipient countries and fully respecting their right to independently choosing their own paths and models of development. The basic principles China upholds in providing foreign assistance are mutual respect, equality, keeping promise, mutual benefits and win-win.

— White Paper: China's Foreign Aid (2014)

The founding declaration of the Forum on China-Africa Cooperation (FOCAC) makes explicit China's critique of the dominant global mode of foreign aid, which in the Chinese view results in the mistreatment of developing countries: [10]

Each country has the right to choose, in its course of development, its own social system, development model and way of life in light of its national conditions. . . . Moreover, the politicization of human rights conditionalities on economic assistance should be vigorously opposed to as they constitute a violation of human rights.

In contrast to Western models of aid including the OECD model, China does not condition aid on political changes or market liberalization. [6] : 98 

As Professor Dawn C. Murphy summarizes, “From China’s perspective, it is not merely offering an alternative model of foreign aid; it is directly critiquing the current system and the mistreatment of developing countries in that system.” [11] The only political commitment China requires from aid recipients is that they accept the One China principle; China does not otherwise require concessions on issues of governance. [11]

China's approach to financial aid has not changed over time, but the scope of its aid has grown as its own economic development needs have increased. [11]

As of 2017, China does not provide comprehensive data on its foreign aid. [12] The OECD has estimated that the quantity of China's ODA-like aid in 2018 was $4.4 billion. [13] If counted as ODA, this would have placed China tenth in the list of donor states that year, between Norway and Canada, and far behind the United States which provided $34 billion. However, China provides a much higher volume of development financing that would not qualify as ODA because it lacks a sufficient concessional element and/or is linked to commercial transactions. [12] [2] A 2017 study for AidData found that China's ODA-like aid was effective at producing economic growth in recipient countries. [12]

Administration and budget

The Department of Foreign Aid of the Ministry of Commerce (MOFCOM) is responsible for administrating the foreign aid program. [14] It does so in coordination with the Ministry of Foreign Affairs. [14] The portfolio of the Department of Foreign Aid includes grants, zero-interest loans, the youth volunteer program, and technical assistance. [14] The grants and interest free loans originate from the national budget. [14] [15] The concessional loan program originates from the Export Import Bank of China but is managed under the direction of the Department of Foreign Aid. [14] In addition, the Department of Foreign Aid provides subsidies from the national budget covers the concessional component of loans. [14]

Due to the secrecy of China's aid programme details (of how much is given, to whom and for what) are difficult to ascertain. [16]

Official discourse and Chinese academic discourse on foreign aid do not typically describe China as a donor country, instead using terminology like mutual assistance, joint development, and South-South cooperation. [6] : 97  In China's 2011 foreign aid white paper, foreign aid is characterized as a model which adheres to equality and mutual benefit which avoids attaching political conditions on recipient countries. [6] : 97 

A RAND published study on "China's Foreign Aid and Government Sponsored Investment" estimates the amount of both traditional aid and much more broadly defined government sponsored investment that was pledged by China in 2011 was 189.3 billion US dollars. [15]

According to a 2017 study, described as “The most detailed study so far of Chinese aid,” by AidData, between 2000 and 2014 China gave about $75 billion, and lent about $275 billion — compared to $424 billion given by America during the same period. [16] A fifth of this Chinese aid, $75 billion, was in the form of grants (about equivalent to Britain's), while the rest was concessional lending at below-market interest rates. [16]

In 2019, China provided approximately $5.9 billion in foreign aid. [17] : 256 

Forms of aid and recipients

Official sources divide aid into three categories: grants, interest free loans, and concessional loans. [6] : 97  Deborah Brautigam identifies in her book The Dragon's Gift nine types of aid from China including "medical teams, training and scholarships, humanitarian aid, youth volunteers, debt relief, budget support, turn-key or ‘complete plant’ projects [infrastructure, factories], aid-in-kind and technical assistance." [18]

Grants or non-interest loans have funded 2,025 complete infrastructure project, from the start of aid efforts up to 2009, in the categories of farming, water distribution, conference buildings, education facilities, power supply, transport, industrial facilities, and other projects. [19] Perhaps the famous type of project is a football stadium, which has been referred to as stadium diplomacy. [20] A similar type of project that receives attention is the construction of theatres and opera houses. [21]

Africa

There is an African focus with about 45% of aid going to African countries in 2009, [22] and a majority going to African countries in 2019. [17] : 256  A report by AidData, a research lab at the College of William & Mary, found that as of 2014 the majority of Chinese official development assistance went to Africa. [23] The greatest recipients of Chinese aid in sub-Saharan Africa are, in descending order, Côte d’Ivoire, Ethiopia, Zimbabwe, Cameroon, Tanzania, Ghana, Mozambique, and Republic of Congo. [24]

In August 2022, the Ministry of Foreign Affairs of the People's Republic of China announced that it would forgive 23 interest-free loans that matured at the end of 2021 to 17 unspecified African countries. [25]

Asia

"CHINA AIDS FOR SHARED FUTURE" sign at Hanuman Dhoka, Kathmandu, Nepal (2023) "CHINA AIDS FOR SHARED FUTURE" sign at Hanuman Dhoka, Kathmandu, Nepal (2023).jpg
"CHINA AIDS FOR SHARED FUTURE" sign at Hanuman Dhoka, Kathmandu, Nepal (2023)

In December 2005, China donated $20 million to the Asian Development Bank for a regional poverty alleviation fund; it was China's first such fund set up at an international institution. [26]

China's financial assistance for infrastructure development has significantly increased supply capacity in south Asia, particularly among the smaller south Asian countries, beginning in the mid-2000s. [27] Nepal benefitted from increased Chinese aid, including Chinese financing for a railway from Kathmandu to Lhasa. [27] China has been an important foreign aid contributor to Sri Lanka since the end of the Sri Lankan Civil War in 2009. [27] In Bangladesh, Chinese foreign aid has also become increasingly important. China has built six major "friendship bridges" in Bangladesh, among other projects. [27] Because China has trade surpluses with these countries, its providing of foreign aid is viewed by the smaller south Asian countries as a means of insuring their respective bilateral relationships with China are mutually beneficial. [27]

From the 1970s up to 2022 China has reportedly implemented more than 100 aid projects in Pacific Island countries. [28]

From 2000 to 2014, Cambodia received 132 projects financed by Chinese aid, a greater number of projects than any other recipient of Chinese aid. [29] : 103 

China's role in the Armenian economy has been a major force for growth and development. Since the early 2000s, China has become Armenia's largest foreign donor, providing over $2 billion in foreign aid between 2000 and 2017. China's foreign aid to Armenia has been largely focused on infrastructure projects, such as roads, power plants and telecommunications networks, as well as assistance in areas of health and education. In 2020, Chinese President Xi Jinping announced a new $1 billion investment package for Armenia, which will be used to fund infrastructure and other economic projects. China's foreign aid to Armenia has been a catalyst for economic growth and development in the country. In the five years between 2000 and 2005, Armenia's GDP grew by an average of 6.8% annually, a rate that was more than double the average rate of 2.9% for the same period in the former Soviet Union. This growth was largely due to China's support for Armenian infrastructure projects, which helped to reduce transport costs, promote economic diversification, and improve the country's overall economic competitiveness. In addition to infrastructure projects, China has also provided assistance in other areas of the Armenian economy. In 2017, China provided over $15 million in grants and loans to Armenia to help finance the development of education and health systems. China has also provided technical assistance in the areas of agriculture, energy, and technology. By investing in these sectors, China has helped Armenia become a more self-sufficient and competitive economy. China's foreign aid has also helped to strengthen the Armenian government's stability and legitimacy. In 2020, Xi Jinping announced a $1 billion investment package for Armenia, which included a range of infrastructure and economic projects. This package was seen as a sign of China's commitment to Armenia's economic development, and was seen as a major boost for the Armenian government's legitimacy. Overall, China's foreign aid to Armenia has been a major force for economic growth and development in the country. Through its investments in infrastructure, health, education, and other sectors, China has helped Armenia to become a more self-sufficient and competitive economy. [30]

See also

Related Research Articles

Official development assistance (ODA) is a category used by the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) to measure foreign aid. The DAC first adopted the concept in 1969. It is widely used as an indicator of international aid flow. It refers to material resources given by the governments of richer countries to promote the economic development of poorer countries and the welfare of their people. The donor government agency may disburse such resources to the government of the recipient country or through other organizations. Most ODA is in the form of grants, but some is measured as the concessional value in soft (low-interest) loans.

<span class="mw-page-title-main">Development aid</span> Financial aid given to support the development of developing countries

Development aid is a type of foreign/international/overseas aid given by governments and other agencies to support the economic, environmental, social, and political development of developing countries. Closely related concepts include: developmental aid, development assistance, official development assistance, development policy, development cooperation and technical assistance. It is distinguished from humanitarian aid by aiming at a sustained improvement in the conditions in a developing country, rather than short-term relief. Development aid is thus widely seen as a major way to meet Sustainable Development Goal 1 for the developing nations.

<span class="mw-page-title-main">Aid</span> Voluntary transfer of resources from one country to another

In international relations, aid is – from the perspective of governments – a voluntary transfer of resources from one country to another.

<span class="mw-page-title-main">African Union Commission</span> Part of the African Unions executive branch

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Japan has been establishing its foreign aid contributors since the 1990s. The three government institutions involved in disbursing this are: the Japan International Cooperation Agency (JICA), and the Japanese Bank of International Cooperation (JBIC). This is now the nodal agency for all Japanese concessional loans, and replaced Japan Export-Import Bank (JEXIM) and the Overseas Economic Cooperation Fund (OECF) in 1999.

Japan emerged as one of the largest foreign aid donors in the world during the 1980s.

<span class="mw-page-title-main">Tied aid</span> International transfer of resources with geographic limits on procurement and spending

Tied aid is a kind of foreign aid. It must be spent on products & services provided by companies that are from the country providing the aid or in a group of selected countries.

<span class="mw-page-title-main">Forum on China–Africa Cooperation</span> Multilateral cooperation group

The Forum on China–Africa Cooperation (FOCAC) is an official forum between the People's Republic of China and all states in Africa with the exception of the Kingdom of Eswatini. It is the primary multi-lateral coordination mechanism between African countries and China and since 2018 is viewed by those countries as a cooperation platform within the Belt and Road Initiative.

<span class="mw-page-title-main">Development Assistance Committee</span> OECD committee

The Organisation for Economic Co-operation and Development's (OECD) Development Assistance Committee (DAC) is a forum to discuss issues surrounding aid, development and poverty reduction in developing countries. It describes itself as being the "venue and voice" of the world's major donor countries.

National champions are corporations which are technically private businesses but due to governmental policy are ceded a dominant position in a national economy. In this system, these large organizations are expected not only to seek profit but also to "advance the interests of the nation"; the government sets policies which favor these organizations. The policy is practiced by many governments, in some sectors more than others, but by giving an unfair advantage against market competition, the policy promotes economic nationalism domestically and global pre-eminence abroad contrary to the free market. The policy also deters or prevents venture capitalism.

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<span class="mw-page-title-main">Korea International Cooperation Agency</span> South Korean aid organization

The Korea International Cooperation Agency was established in 1991 by the Ministry of Foreign Affairs of South Korea as a governmental organization for Official Development Assistance (ODA). KOICA's goal is to enhance the effectiveness of South Korea's grant aid programs for developing countries by implementing the government's grant aid and technical cooperation programs. KOICA is led by three-year-term president of the board who is appointed by the President upon the recommendation of Foreign Minister.

The China-Africa Development Fund, more commonly known as CAD Fund, is a China Government Guidance Fund solely funded by China Development Bank, a Chinese government policy bank. The aim of the fund is to stimulate investment in Africa by Chinese companies in power generation, transportation infrastructure, natural resources, manufacturing, and other sectors.

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Indian foreign aid is the aid given by the Indian government to other governments. India's major quantum of foreign aid is given to neighbouring countries. According to India's budget in 2021–22, its direct overseas aid stood at ₹18,154 crore (US$2.3 billion). That apart, India also extended a direct line of credit worth $30.66 billion to several foreign countries for developmental projects. The way of providing a much larger share of aid in the form of concessional loans is quite similar to that of China. India has set up 'Indian Agency for Partnership in Development' as a part of Ministry of External Affairs (India) to channelize aid to recipient nations.

The Saudi Fund for Development (SFD) is a Saudi Arabian government agency that provides development assistance to developing countries by financing social and infrastructure projects. The fund seeks to support the economies of recipient countries by enhancing economic growth and promoting job opportunities. SFD was established in 1974 and began operations in 1975. SFD's activities include development, finance, trade, and funding. The fund is led by H.E. Mr. Ahmed bin Aqeel Al-khateeb who also serves as the Minister of Tourism for Saudi Arabia.

The China–Arab States Cooperation Forum (CASCF) is a formal dialogue initiative between China and the Arab League established in 2004. It serves as the primary multilateral coordination mechanism between China and the Arab states.

References

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  2. 1 2 "China's Global Development Footprint". AidData. Archived from the original on 2019-11-12. Retrieved 2021-02-09.
  3. 1 2 "China's Foreign Aid (2014)". The State Council, The People's Republic of China. Archived from the original on 2020-01-05. Retrieved 2021-02-09.
  4. 1 2 3 Li, Xiaoyun. "China's Foreign Aid and Aid to Africa" (PDF). Archived (PDF) from the original on 2020-03-20. Retrieved 2021-02-08.
  5. ↑ Murphy, Dawn C. (2022). China's rise in the Global South : the Middle East, Africa, and Beijing's alternative world order. Stanford, California: Stanford University Press. p. 168. ISBN   978-1-5036-3060-4. OCLC   1249712936.
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  7. 1 2 Asian perceptions of Gulf security. Li-Chen Sim, Jonathan Fulton. Abingdon, Oxon: Routledge. 2022. p. 31. ISBN   978-1-003-22737-3. OCLC   1347700067.{{cite book}}: CS1 maint: others (link)
  8. ↑ Sued, Hilal K. (2012-04-11). "TAZARA: How the great Uhuru Railway was built". Embassy of the People's Republic of China in the United Republic of Tanzania. Archived from the original on 2014-09-01. Retrieved 2021-02-09.
  9. 1 2 Lynch, Leah; Andersen, Sharon; Zhu, Tianyu (2020-07-09). "China's Foreign Aid: A Primer for Recipient Countries, Donors, and Aid Providers". Center for Global Development. Archived from the original on 2020-08-04. Retrieved 2021-02-09.
  10. ↑ Murphy, Dawn C. (2022). China's rise in the Global South : the Middle East, Africa, and Beijing's alternative world order. Stanford, California. pp. 82–83. ISBN   978-1-5036-3060-4. OCLC   1249712936.{{cite book}}: CS1 maint: location missing publisher (link)
  11. 1 2 3 Murphy, Dawn C. (2022). China's rise in the Global South : the Middle East, Africa, and Beijing's alternative world order. Stanford, California: Stanford University Press. p. 172. ISBN   978-1-5036-3060-4. OCLC   1249712936.
  12. 1 2 3 Dreher, Axel; et al. (October 2017). "Aid, China, and Growth: Evidence from a New Global Development Finance Dataset" (PDF). Aiddata. Archived (PDF) from the original on 2017-10-31. Retrieved 2021-02-09.
  13. ↑ "Other official providers not reporting to the OECD". OECD. Archived from the original on 2021-02-10. Retrieved 2021-01-29.
  14. 1 2 3 4 5 6 Bräutigam, Deborah (March 2010). "China, Africa and the International Aid Architecture". Africa Development Bank.
  15. 1 2 China's Foreign Aid and Government-Sponsored Investment Activities (PDF). RAND. 2013.
  16. 1 2 3 "Despite its reputation, Chinese aid is quite effective". The Economist . 12 October 2017.
  17. 1 2 Eisenman, Joshua; Heginbotham, Eric (2023). "China's Relations with the Global South". In Kironska, Kristina; Turscanyi, Richard Q. (eds.). Contemporary China: a New Superpower?. Routledge. ISBN   978-1-03-239508-1.
  18. ↑ "Analysis: Behind China's aid structure". IRIN. September 17, 2013.
  19. ↑ "China's Foreign Aid". Xinhua. 2011-04-21. Archived from the original on May 2, 2011.
  20. ↑ Foreign Aid: Diplomacy, Development, and Domestic Politics. The University of Chicago Press. 2007. p. 32.
  21. ↑ "An Opera House for Algeria". COMMANDOpera. April 21, 2010.
  22. ↑ "China Gives Almost Half of Foreign Aid to African Countries". Bloomberg. April 21, 2011.
  23. ↑ Murphy, Tom (2017-10-31). "Find Out Some (But Not All) The Secrets Of China's Foreign Aid". NPR. Retrieved 2022-08-06.
  24. ↑ Murphy, Dawn C. (2022). China's rise in the Global South : the Middle East, Africa, and Beijing's alternative world order. Stanford, California: Stanford University Press. p. 170. ISBN   978-1-5036-3060-4. OCLC   1249712936.
  25. ↑ Backhouse, Andrew (2022-08-22). "China forgives debt for 17 African nations amid accusations of debt trap diplomacy". news.com.au . Retrieved 2022-08-22.
  26. ↑ Zhao, Suisheng (2023). The dragon roars back : transformational leaders and dynamics of Chinese foreign policy. Stanford, California: Stanford University Press. p. 70. ISBN   978-1-5036-3415-2. OCLC   1332788951.
  27. 1 2 3 4 5 Kelegama, Saman (2016). "China as a Balancer in South Asia". The new great game : China and South and Central Asia in the era of reform. Thomas Fingar. Stanford, California: Stanford University Press. p. 198. ISBN   978-0-8047-9764-1. OCLC   939553543.
  28. ↑ "Fact Sheet: Cooperation Between China and Pacific Island Countries".
  29. ↑ Garlick, Jeremy (2024). Advantage China: Agent of Change in an Era of Global Disruption. Bloomsbury Academic. ISBN   978-1-350-25231-8.
  30. ↑ "Development and 'transition' in Armenia: Contexts and concepts", Armenia and Europe, I.B. Tauris, 2019, doi:10.5040/9781788315418.ch-001, ISBN   978-1-7883-1174-8, S2CID   239311810 , retrieved 2022-12-09
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