How is China's foreign aid changing?

From the outside, the Chinese government’s foreign aid efforts can seem opaque and hard to disentangle from the rhetoric of geopolitical competition. China’s loans to lower-income countries — which make up the bulk of a roughly $80 billion annual development portfolio — are disparaged by rivals as a form of “debt trap diplomacy.” The much smaller amount of funding that would be categorized as development assistance — likely in the single-digit billions on par with a mid-sized donor — tends to fly under the radar. But experts who have peeled back the layers of China’s global development engagement paint a complex picture of a country that draws on its own history to inform its approach to international assistance — and whose foreign aid system is currently evolving in important ways. “Chinese aid has been professionalizing itself,” said Marina Rudyak, assistant professor at Heidelberg University, speaking about the Chinese government’s increasing concern for incorporating monitoring and evaluation in its development projects. She added that Chinese delegations now travel to European and United States donor agencies to learn about monitoring and evaluation approaches. “This is something we didn't have much in the early 2010s where the whole idea was a completed project is an effective project,” Rudyak said, speaking at a Devex Pro Live event on Monday. While China’s infrastructure initiatives tend to garner the most attention as a cornerstone of its development strategy, those efforts are shifting too, said Yukon Huang, senior fellow at Carnegie Endowment for International Peace. Huang said that China’s allocations for “big ticket” infrastructure projects under the banner of the Belt and Road Initiative — China’s flagship global infrastructure and connectivity campaign — have “diminished a lot.” That reflects financial pressures that have slowed China’s economic growth and taken a toll on its exchange rates, but it has also come with a greater emphasis on exporting the standards and systems that operate alongside physical infrastructure, Huang said. “I think this will create a tension with the West,” Huang said, noting that Western governments are trying to do the same thing. In its international development efforts, the Chinese government emphasizes its commitment to south-south cooperation and noninterference in other countries’ internal affairs as a means of distinguishing its approach from that of other donors. That can result in Chinese aid being more “demand-driven” and request-based, said Andreas Fuchs, professor at the University of Göttingen. On one hand that can mean that Chinese aid is more responsive to what countries want, but on the other it can mean fewer safeguards against elite capture or special interests. For example, Fuchs and other researchers found that Chinese aid spending is more likely to end up in the birth regions of African political leaders — an outcome that does not hold for traditional donors such as the World Bank. “This could be an adverse outcome of this principle of non-interference and this request-based development assistance — less safeguards on how the money is delivered,” Fuchs said.