Despite critics, China's development clout continues to expand

The Chinese flag. The country is poised to become the third-largest donor in the Pacific, after Australia and the United States. Photo by: Simon Q / CC BY-NC-ND

Much has been said about China’s growing development assistance to — and influence in — Africa and Asia. What hasn’t been discussed as much is the East Asian behemoth’s rising spending in the Pacific, where Beijing is poised to become its third-largest donor.

According to data from the Lowy Institute in Australia, China has provided nearly $1.5 billion in foreign aid to the Pacific since 2006, at least $200 million more than what traditional regional powerhouse Japan disbursed to the region between 2006 and 2013.

One widespread criticism of Chinese aid is that the needs of recipient countries and communities are often not taken into account. A more cynical take is that China is using development assistance simply as a tool to expand its economy, using Chinese firms and workers to build infrastructure that would help Chinese businesses expand their markets or reduce their operating costs.

Some experts suggest this is not the case in the Pacific.

Philippa Brant, research associate and Chinese aid expert at the Sydney-based institution, said China has shown “willingness to fund large infrastructure projects” many Pacific island nations need but most traditional donors do not fund. And this, Brant emphasized to Devex, is something Pacific island leaders appreciate.

Paul D’Arcy, associate professor at the Australian National University’s College of Asia and the Pacific, agrees, noting that this rare willingness to fund projects “which conventional donors have moved away from in recent years in favor of capacity building and training” shows a different side of Chinese aid.

“China works with host nations and other aid agencies … and increasingly asks [them] what sort of aid and projects they want. Conventional Pacific aid donors are less flexible,” he told Devex, underscoring how traditional donors’ shift to capacity building left an opportunity for China to invest in the deprioritized sectors.

Not a one-way street

China, however, is not the only donor that has taken this approach in the Pacific, joining the likes of India and South Korea. Without putting China’s development assistance in this context, critics might overlook “other aspects of [Chinese] aid that may turn out to be more influential” in driving aid to the region, the ANU professor warned.

Brant further explained that China’s development approach of “South-South cooperation” anchored on “mutual benefit” does not mean recipient countries cannot insist on certain standards and requirements. The Chinese aid expert further noted that the East Asian nation does recognize that aid is not a one-way street, where recipients accept donor money without question.

“Those that criticize concessional loans and the like do so on the basic assumption that Pacific governments enter into such agreements without realizing the full consequences and that such arrangements are dangerous because of a lack of capacity and sophistication in dealing with outsiders,” D’Arcy shared, explaining that some Pacific nations are “sophisticated negotiators” and are fully aware of their “circumstances and priorities.”

Further, China’s expansion in the Pacific provides greater flexibility and more “leeway” for these island nations “to choose the terms of external relationships rather than have them [be] dictated.” By giving them more ownership, governments of Pacific island nations are afforded the opportunity to drive their own development.

D’Arcy however cautioned that there are risks to completely aligning development assistance priorities with government interests, including exacerbating poor governance and corruption in the region.

The key then, according to Brant, is for Pacific island leaders to “work out how best to capitalize on China’s engagement to the benefit of the countries.”

“Island leaders … are willing to give the Chinese a chance and value having new players to put pressure on conventional donors to better match … needs and requests,” D’Arcy concluded. “Many communities perceive corrupt and neglectful government officials in the Pacific nations to be as much of a problem as new outsiders.”

What do you think about China’s growing role — and nontraditional approach — in development? Let us know by leaving a comment below.

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About the author

  • Lean 2

    Lean Alfred Santos

    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.