What aid has China given, and how is this linked to prescriptive behaviour?

27 Jan

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

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2 Responses to “What aid has China given, and how is this linked to prescriptive behaviour?”

  1. Katherine Hill February 4, 2013 at 4:54 pm #

    China is sometimes referred to as one of the BRIC, economies along with Brazil, Russia and India. The BRIC economises are newly industrialising countries that have made the transition from the developing world but have not yet displayed all the characteristics of a developed country. China as one of the world’s richer countries having not been so affected by the global financial crisis is a large contributor of world aid.
    For aid to be useful there must be some aid transparency as it is important to be open and transparent so that how and where the aid is used can be known. This would help to improve efficiencies and accountability, whilst trying to limit waste and corruption. Most of the aid giving countries have signed up to agreements at the G8 and G20 summits.
    For some reason China doesn’t like the term ‘aid’ and so use the term ‘external assistance’. Some believe this is a strategy to distance them from the West.
    China also defines aid differently to other parts of the DAC as China includes the construction of spots facilities, military assistance and subsidised loans for joint ventures that are taken place with the assisted country and co- operative projects. China also doesn’t count some of the thing that are counted by the DAC, including costs of foreign students, costs for first year refugees in the donor country and the financial cost of debt relief.
    Therefore by China changing the definitions and structure to their global assistance programme they attempt to get away with forcing themselves on indebted countries that have little choice in the matter, in what the Chinese really see as a business opportunity. The Chinese entrepreneurs stretch from Tanzania to Angola and have had partial success. An example of Chines aid is Angola, where the Chinese investment in transport by train, (through a loan that they are tied to spending on hiring Chines workers), has led to them being a supplier of crude oil to the US and China, triggering a reconstruction boom. Corruption allegations seem not to be a concern for the Chinese investors.
    References
    BBC, 2012. Angola Profile
    http://www.bbc.co.uk/news/world-africa-13036732
    [accessed 04/02/13]
    Grimm. S, (2011) Transparency of Chinese Aid: An analysis of the published information on Chinese external financial flows. CENTRE FOR CHINESE STUDIES
    http://www.aidtransparency.net/wp-content/uploads/2011/08/Transparency-of-Chinese-Aid_final.pdf
    Accessed [04/02/13]
    Rowlatt, 2010. ‘China follows British footsteps to African wealth’ BBC News, Angola
    http://news.bbc.co.uk/1/hi/programmes/from_our_own_correspondent/9023642.stm
    [accessed 04/02/13]

  2. pw9g10 February 5, 2013 at 5:33 pm #

    The idea of China becoming increasingly likely to conform to the regulations abided by the DAC countries appears strong considering the phases its foreign aid has progressed through. It is evident that China has moved away from its focus on promoting Communism and is moving towards giving aid in the way that we are typically used to seeing. Perhaps its continued development and economic rise will see a reduction in the need for mutual benefit and therefore an increased focus on economic development in the recipient countries. With China’s foreign assistance being likely to increase in light of counteracting the USA’s position as the only superpower it is entirely plausible to believe that a new phase in Chinese foreign aid will be experienced where the objectives and processes fall in line with those of the DAC countries.

    History provides many examples of Western countries exploiting the resource rich lands of underdeveloped countries which in turn caused those Western countries to embark on its seemingly fairer and more open foreign aid that it provides today. Therefore China’s actions in Africa can be viewed as that stepping stone that may eventually cause its foreign aid policies to align much more closely with those of the DAC countries. However, Rowlatt (BBC, 2010) implies that the agreement between Angola and China is a much fairer one which is helping to alleviate in part one of Africa’s many problems: a lack of infrastructure.
    Rowlatt, 2010. ‘China follows British footsteps to African wealth’ BBC News 23 September
    Available from: http://news.bbc.co.uk/1/hi/programmes/from_our_own_correspondent/9023642.stm [Accessed: 5th February 2013].

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