Editor’s note, Nov. 14, 2018: Since publication of this article, the name of China’s development agency has changed to China International Development Cooperation Agency, or CIDCA.
CANBERRA — When China first announced its new agency focused on foreign aid last month, little information was provided on its functions and responsibilities.
But on April 4, the first head of the State International Development Cooperation Agency, or SIDCA, was appointed, and with the announcement comes insight into the direction China will be moving with its foreign aid efforts. Wang Xiaotao will be the agency’s first director — an appointment that surprised many observers of Chinese politics.
Who is Wang Xiaotao?
Understanding the experience and expertise that Wang brings provides important insight into the direction of the new agency, which was officially unveiled on April 18.
It's still a plan, but there is already a lot of interest — and hopes — in the possibility of a China international development cooperation agency.
Wang was promoted to the role of deputy director of the National Development and Reform Commission in December 2014 where he was specifically tasked with responsibility for foreign capital, overseas investment, and trade.
He took on the new role following decades of experience within the commission; he had worked there since 1986, when it was known as the State Planning Commission, with a focus predominantly on investment management. Currently aged 57, Wang has built a career with a development focus domestically.
As deputy director of the NDRC, Wang entered the international stage with the Belt and Road initiative a focus of his engagement. He has negotiated and supported countries such as India, Laos, Latin America, Pakistan, Serbia, Singapore, and Thailand, on transport initiatives linked to the program. He has also been involved in promoting the initiative domestically.
His role has seen him engage with Pakistan on nuclear power projects, the United States on collaborative climate change initiatives, and the European Commission on social security and employment. Domestically, his initiatives have included advancing e-commerce in rural areas of China.
Wang has also shown his ability to work with diverse partners — including the Ministry of Commerce, Ministry of Foreign Affairs, United Nations Industrial Development Organization, and with the private sector to support more investment in China.
This background suggests Wang has the capability and respect to work with other governments on behalf of China, as well as bring together diverse capability within the new aid agency. But it also shows that economic development and infrastructure may continue to be the focus of China’s international development agenda.
The response to the announcement
Before Wang was announced as the new head of SIDCA, there was media speculation that an official from the Ministry of Commerce, or MOFCOM, or the Ministry of Foreign Affairs would chair this new aid agency. MOFCOM is currently the main aid agency in China, with additional work being conducted by the ministry of finance and other agencies, but MOFCOM’s lead put their staff in the headline position.
But the announcement has proved the speculation wrong — and has been met with interest.
“For me, appointing Mr. Wang as the director of the new aid agency sends out some signals,” Dr. Denghua Zhang, research fellow at the Coral Bell School of Asia Pacific Affairs, explained to Devex. “MOFCOM and the Ministry of Foreign Affairs have been competing for control of Chinese foreign aid for decades. Appointing a new director from a third party or a third agency could bypass this conflict — and could make the process of establishing the new agency as easier. But I’m not sure if it could be interpreted as a compromise.”
The second signal it sends, Zhang said, is demonstrating that the government has high hopes for this new aid agency — especially considering the importance the NDRC has within China.
“Mr. Wang and his former ministry have been the macroeconomic management development agency in China and he has gained a lot of experience in this planning — and this matches perfectly with this new aid agency,” Zhang said. “The government has said the objective of this new agency is to promote aid coordination, and one of their main tasks will be aid planning rather than aid implementation. So Mr. Wang is an ideal person to direct this work.”
Information on Chinese development aid remains scant. That which is out there has done little to satiate the aid community’s thirst for understanding, or to expand on the scarce amount of official information provided to date. Devex takes a look at everything you need to know about Chinese aid. From who manages it, to how it is disbursed, to what impact it has, this is a must-read for anyone seeking to understand the underpinnings of Beijing's foreign aid and development programs.
Domestically, the response within China to the establishment of SIDCA and announcement of Wang as its leader has been quiet.
“People would be very interested in [a] foreign aid program but there is the issue of aid transparency,” Zhang said. “The government has not released much information and there are only a few stories that come out.”
Where will foreign aid sit in in China’s foreign politics?
Despite developing a new agency focused on international development, it is not expected that foreign aid will be the focal of China’s international engagement.
“If you follow the Chinese history of foreign aid, it is fair to say that foreign aid is an important component of foreign policy, but not the most important,” Zhang said. “The most important is trade and investment — this is the top priority. But the establishment of the new aid agency suggests that China wants to better incorporate aid in foreign diplomacy and wants to use aid as a tool to maximize China’s foreign interests and increase its influence on the global scale.”
An area where SIDCA will have an important role is in establishing policy and monitoring for Belt and Road — an area in which Wang has extensive experience. While there are a number of other line agencies supporting various initiatives linked to Belt and Road, the policies, directions, and international negotiations are expected to occur through SIDCA. And this will provide them with a key seat in supporting foreign policy.
SIDCA is expected to maintain its focus on existing regions that its aid program supports — particularly Africa and Asia. Greater trilateral partnerships between China, a traditional donor country, and a developing country, will expand under the guide of the agency. And programmatically, Zhang expects that monitoring and evaluation will be a priority to improve development impact — and communicate this impact internationally.
What comes next?
The announcement of the new head for SIDCA has not yet been accompanied by details of additional staff, structure, divisions, or policies. Currently, aid related announcement and functions remain with MOFCOM.
But statements from the Chinese government hint at the agency’s role.
“This new aid agency will mainly do the aid planning,” Zhang explained. “The government have already made clear that the implementation of aid should be left with the existing agencies — including the Ministry of Commerce, the Ministry of Health and Ministry of Agriculture. These other line agencies will continue to play an important role in the new agency.”
Wang’s focus now needs to be on bringing together the large number of line agencies with their finger in the international development pie.
“This will be a very interesting role for Mr. Wang, but challenging,” Zhang said.
Currently there are no timeframes for Wang to have his new agency operational, somewhat easing the task ahead. And it may be a case of moving slow and steady to ensure SIDCA’s foundations are strong.