The international development finance landscape is changing — not just in the emergence of new donors with new money, but in the way they do things. And China, one of the world’s most significant emerging donors, is at the forefront of this change.
For the past two years alone, Asia’s economic behemoth has been setting up economic and development institutions left and right, including the Beijing-based Asian Infrastructure Investment Bank, the BRICS’ New Development Bank headquartered in Shanghai, and the “One Belt, One Road” initiative. And all this in addition to the country’s growing financial flows and assistance to other regions of the world over the past decade or so.
But Chinese assistance, in all its permutations, has been subject to much scrutiny and criticism — especially in terms of the form such assistance takes and the motivations behind it. Over the past few years experts have variously characterized China’s burgeoning development finance as “rogue aid,” while others have rallied behind the East Asian nation’s approach to Africa, tagging it as just “misunderstood” and dismissing criticism as “sensationalist and paranoid.”
So what are some of the misgivings about Chinese aid to Africa? And how can we separate truth from speculation, misconception and myth?
Researchers from AidData released a report titledApples and Dragon Fruits in October, in an attempt to cast light on China’s much-maligned development portfolio on the African continent.
One of these claims, AidData co-executive director Brad Parks said, includes the notion that Chinese aid to Africa is now bigger than that of the development assistance provided by the United States. While China’s presence in Africa dates back decades, authors of the AidData report have confirmed that this is unlikely.
Parks told Devex that clarifying the issue requires a “clear understanding of what should constitute official development assistance” and is complicated by the fact that China does not participate in the “international development reporting regime for global development finance.”
The report argues the fact that “much of the controversy about Chinese ‘aid’ results from a failure to distinguish between China’s [ODA] and more commercially oriented sources and types of state financing.”
What exacerbates this issue is China’s decision not to publish separate data on its ODA flows and its so-called other official flows. OOF defined by the OECD, which also generates its own OOF data, as financial transfers that either totally or partially (up to 25 percent) lack a significant grant element, or lack an explicit development purpose. Navigating the blurred lines between the two concepts can significantly skew analysis on development aid.
Parks and his AidData colleagues told Devex that they have developed separate measures of Chinese ODA and OOF, and they find that while Chinese OOF tends to go to “corrupt” countries and countries that are “rich in natural resources,” Chinese ODA does not.
To illustrate, AidDatastudies show that from 2000-2013 collective commitments of both ODA and OOF of China and the U.S. to Africa amounted to about $94.3 billion and $107.9 billion respectively. But if we look atODA to Africa from each of the countries the numbers start to drift apart, with China committing about $31.5 billion and the U.S. earmarking $92.7 billion over the same period.
Despite substantial data from the Washington, D.C.-based group on China’s growing aid to Africa (and elsewhere), it remains unclear to what extent the country's development assistance has grown in the past few years — especially given its continued economic growth since 2013 and its high-profile political efforts to gain global influence, reach and new business.
Another issue that Parks shared with Devex is Chinese aid’s seeming alignment with Beijing’s foreign policy — something, he added, is also evident with other traditional Western donors. A disproportionate amount of Chinese aid, according to the report, goes to countries aligned with the East Asian nation’s U.N. politicking, as well as countries that recognize the “one China” policy.
“Chinese aid flows to states that do not recognize Taiwan as a country and only the People’s Republic of China,” Parks said. “It also goes to countries that vote with China in the U.N. General Assembly.”
There are also some claims, as the report revealed, that Chinese aid flows disproportionately to corrupt, authoritarian and natural resource-rich countries. Together with the country’s polarizing aid policy of noninterference in domestic affairs, this has fueled misgivings about China’s motives. Indeed, experts from the University of Sussex have argued that Chinese aid, directly or indirectly, fuels political violence and sustains pariah states in Africa.
But Parks told Devex that the key to understanding this issue is to know what to consider as Chinese ODA or not — probably one of the biggest misconceptions that China has to address head on given its growing stature as a major development player.
As the report mentioned, “it is not ODA that flows to … countries [with poor governance] but rather OOF, which is not aid in the traditional sense.
Lean Alfred Santos is a Devex development reporter focusing on the development community in Asia-Pacific, including major players such as the Asian Development Bank and the Asian Infrastructure Investment Bank. Prior to joining Devex, he covered Philippine and international business and economic news, sports and politics. Lean is based in Manila.
Subscribe to Devex Newswire
Top international development headlines emailed to you every day