By Dr. Hui-Chi Yeh
Since the end of WW2, Chinese foreign aid has been increasing. Initially, Chinese aid was confined to military and food aid, but has diversified and grown over time. Only recently has aid been more focussed upon development and infrastructure. In the early years of the PRC, China provided assistance to liberation movements in the colonies of the imperial powers as part of the communist fight against imperialism.
In 1960, the OECD laid out principles for providing government funding for promoting overseas development in poorer countries. The OECD members signed up and agreed to conform to the regulations. First, funding must promote economic development and welfare in the recipient countries. Second, funding must be given on a concessional basis with a grant element of at least 25%. China at this time was isolated from the world and didn’t sign up to OECD rules, but it did form its own Eight Principles for Economic Aid and Technical Cooperation to Other Countries, in 1964. Since 1950, China has given 256 billion RMB in overseas assistance, to 161 countries.
Historically, China gave aid as part of its tribute system, with an implicit understanding that political goals were preferential to economic goals. Modern Chinese aid takes the form of grants, interest free loans and concessional loans. Economic goals are generally preferential to political and ideological goals. The basis of aid giving still remains to maintain harmony and peace through good governance, and is still seen in China’s pursuit of win-win relations.
Though China has tried to behave differently when formulating its foreign aid policies, its practice still mirrors its own experiences as a recipient, primarily with respect to Japan. This experience has the form of complete projects, where China uses its resources to build infrastructure in foreign countries, with projects underwritten with resources beneficial to its own growth. A second form of aid has been the provision of goods and services, such as medical devices, food, office equipment and technical products, to help developing countries improve their internal industries. To support these products, China has also provided technical assistance and training to ensure the self sufficiency of the local countries. Human resource development has also been provided through assistance channels to maintain self sufficiency of development. Medical and humanitarian aid is distributed as assistance in the wake of natural disasters and emergencies, along with volunteers who assist in the continued development of the local population. Debt relief is also another form of aid which China provides, often by cancelling government debts owed by foreign countries.
When reviewing China’s history of foreign aid, since the 1950s three distinct phases in policy can be seen. While the eight principles of Confucian culture behind aid have remained constant, motivations have varied considerably. Between 1950 and 1970, China used its foreign aid primarily as an ideological tool in its support of world communism.
As the 1970s progressed, and throughout the 1980s, China moved away from pursuing ideological goals, and more towards goals of economic sustainability and mutual benefit, taking advantage of increasingly multilateral channels. Since the end of the Cold War, there has been a huge increase in financial aid and technical assistance, emphasising reciprocity and mutual benefit of economic development.
The motivation behind aid has also followed distinct patterns, aid to Africa and Latin America has largely been economically motivated towards securing resources and commercial benefit. More recently, this approach has expanded into the Central Asian/former Soviet states. Political objectives motivate China’s aid to its peripheral neighbouring aid recipients. Countries like North Korea and the Central Asian states receive aid as part of China’s development of stable border regions. China’s aid has taken the form of a business, where creativity is paramount to success over altruism.
Increasingly, as China’s aid disbursement patterns have changed, over time, so has its behaviour. This may be rationalised through a process of China learning from the results of its aid disbursement. Whereas the DAC countries conform to norms and abide by regulations when formulating aid, China has displayed a different approach, whereby it has shaped the norms that it embraces based upon the beneficial results of its actions overseas. In the 1950s and 1960s, through its pursuit of world revolution, it contributed assistance towards these goals, which self-perpetuated its ambitions. As the result of these ambitions led to its increasing isolation, it began to seek alternative approaches, by using political support from the developing world to attain its seat at the UN. Having achieved this, its behaviour turned towards redevelopment and self-sufficiency. One could argue that the end of the Cold War imposed changes on the world, which left states to adapt as best they could. As America became increasingly unilateral, as the only superpower, in the absence of the Soviet Union, the resulting actions propelled China to embrace and pursue a path towards increased economic development, to counter the increasing unilateralism. As can be seen from China’s growth, its foreign assistance is likely to expand for several decades to come, however, as it seeks to achieve more and more goals through increased collaboration with Western donors, it will be increasingly obliged to conform, or at least compromise, on its practices, to maintain its pursuit of peaceful and harmonious interactions. How this transpires, will no doubt be reflected by the interdependence of China in its relations with and other donors. What is likely is that China will increasingly seek to embrace the norms which appear beneficial from its interactions and result in possible compromises.
Dr Hui-Chi Yeh is Lecturer in China and Global Politics at Politics and International Relations, University of Southampton