On China’s Foreign Aid

Emerging economies and other non-traditional foreign aid donor countries such as China view aid as a tool to extend their political and economic influence. As noted in a 2009 report by the Federation of American Scientists on China’s Foreign Aid Activities in Africa, Latin America, and Southeast Asia, China’s aid policies focus more heavily upon foreign investments and economic cooperation as a function of aid. The impact of this trend can be seen in China’s first officially published foreign aid policy, one that places a heavy emphasis on economic development.

Unsurprisingly, China’s aid policy report stems from its increasingly fast-paced growth and economic influence in development. Thus, much of the aid provided is in the form of foreign investment projects. Although an officially published report of its aid policies is unprecedented, historically Chinese foreign aid is not new.

The idea of global humanitarian assistance has been an extension of China’s ally building since the mid-1900s. China began actively pursuing development projects (mostly in the form of humanitarian aid) with countries such as Vietnam and Democratic People’s Republic of Korea (DPRK) during the early 1950s. By the 1970s, China began expanding its foreign aid by partnering with Tanzania and Zambia to build infrastructure and establish communications networks. In fact, since its transition to Deng Xiaoping’s “socialist market” economy in 1978, China’s GDP has dramatically increased and economic prosperity has signified its status as a global contender in international development. Today, aid to Pakistan makes up a little more than 18% of China’s foreign aid budget. The top two aid recipient regions are Africa and Asia.  However, an official Chinese foreign aid policy has never crossed the threshold into the international development arena—until now.

In April of 2011, China published its first official foreign aid policy report, which government officials have referred to as the “white papers.”  These papers detail China’s foreign aid development projects, financial resource tools and funding for aid, forms of foreign aid, distribution and management of aid, and international cooperation in tandem with private and public sector aid. In the report, the Chinese government suggests that its national wealth and economic growth in the 21st Century has allowed the country to provide dramatically larger and more comprehensive foreign investment aid packages by offering three different types of aid: grant based loans, interest-free loans, and concessional loans.  

Short descriptions of the types of aid are as follows:

*Grant packages encompass social welfare programs and other human development related projects.

*China’s interest-free loans include grace periods and repayment plans. These loans are mainly issued to assist in building and expanding public works facilities.

*The concessional loans category is the largest and most varied since its goal is to provide aid to medium and large infrastructural projects in all areas of international development.

Thus far, China has provided concessional loans to more than 76 countries.  A 2009 pie chart detailing the percentages of concessional loan allocation calculated by China’s Information Office of the State Council shows that aid to economic infrastructure building makes up 61% of total concessional aid.The second largest percentage of concessional loans is allocated to industry related projects with 16.1%; and in third place, with an allocated amount of 8.9% of China’s concessional loans is energy and resource development. The concessional loans category provides the most details as to how much aid is to be allocated, but does not explain the specific types of development projects.

Overall, the language used in China’s foreign aid policy report is generally vague and details more of its history on foreign aid—scattered with cases studies—rather than give a specific statistical and analytical study of its aid efforts. There are few if any explanations as to how the government gathered and calculated the data. The report would be more useful if China were transparent about how it analysis and calculates its aid.


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