Is the time ripe for China's own aid agency?
China's influence over international development is growing fast, but Beijing continues to channel ODA without using an official agency. An expert tells us how that could change — and affect the role of the Asian Development Bank in the region.
By Lean Alfred Santos // 28 April 2014China’s foreign policy is an issue that continues to polarize the international development community. While Asia’s economic juggernaut is steadily becoming one the world’s fastest-rising emerging donors — with more than $6.4 billion in annual official development assistance, half of which goes to Africa — most observers remain clueless on how Beijing disburses these funds, what the country’s ODA policy really is, and how it views “development assistance” in terms of addressing the world’s humanitarian needs over its own commercial and economic interests. Part of the reason why China’s aid activities continue to be shrouded in mystery — and even misery, some development experts would say — is the lack of centralized and accessible data on Chinese ODA. As Brad Parks, co-executive director of transparency and innovation group AidData, told us last year, much of the data being gathered about Chinese aid is based almost exclusively on “individual case studies and journalistic accounts,” which makes it “tough to know if [the] conclusions are generally true.” The lack of a separate aid agency to oversee Beijing’s ODA activities only makes these worse. Unlike most traditional donors that have official aid agencies, China conducts its foreign aid activities through a special department under the Ministry of Commerce, which operates on a different set of functions and scope. But will this continue in the future, given the country’s growing role in the international development scene, particularly in Africa, and its increased engagement with the Inter-American Development Bank? For a Chinese international policy expert, considering the idea of a government aid agency is inevitable. “China needs to review its current international assistance program and to see whether such an agency is needed,” Xue Lan, dean of Tsinghua University’s prestigious School of Public Policy and Management, told Devex. According to a paper released by the Organization for Economic Cooperation and Development, aid agencies are necessary because they solve the ownership problem in both aid distribution and accountability “caused by the broken feedback loop in foreign aid.” In this sense, China’s lack of an independent aid agency that will (ideally) see through all its ODA activities brings back the issues of lack of data, transparency and accountability that could affect not just the country’s image in the international development stage but also the valuable impact that its development efforts should accomplish in recipient nations, and bring a fresh perspective for all donors. Seeing aid through China’s eyes While the Asian Development Bank, the European Commission and other multilateral organizations focus on wide-ranging development issues like poverty, hunger, health care and capacity-building, much of China’s aid continues to be centered on economic activities, particularly infrastructure. This is why some aid experts are suspicious of Beijing’s real intentions in giving “aid” for instance to Africa, which has benefited from $84.71 billion in Chinese financial commitments over the past decade, according to AidData. Although many analysts welcome any type of assistance to the continent, others believe China is just really after Africa’s natural resources and virtually untapped consumer market for cheap Chinese manufactured goods. Lan noted that this is an issue of perspective — a factor that could make or break the case for a separate Chinese aid agency. “The key point here is that China looks at aid differently. Most of [China’s aid] is geared toward providing mutual economic collaborations,” the academic and former World Bank consultant said. “If we look at China’s aid, it’s not traditional like the donor-recipient approach. It’s centered on partnership.” He added: “China is basically hoping that through these economic partnerships with preferential treatments, both parties will benefit and develop. [Most] of the aid is ... not necessarily in the traditional forms of grants or loans, so it’s not like other international aid agencies ... and that’s why it’s hard to compare.” Even experts based in the West agree on the need to move forward on these misconceptions over China’s own special way of disbursing foreign aid. Yan Wang, a professor at George Washington University, previously told Devex how comparing China to traditional donors is a futile exercise, as the Chinese approach is mainly rooted toward South-South collaboration, and can complement — rather than be replaced by — what traditional donors are doing to make development work more “diverse.” Regional infrastructure development bank A clear example of how China is starting to recognize its leadership role in Asia-Pacific’s development is when Chinese President Xi Jinping a few months ago floated the idea of establishing a regional infrastructure investment bank led by China. Following the announcement, many wondered if that was a subtle hint at China’s ultimate goal of getting into the driver’s seat of Asian development efforts and in the process kicking out a major stakeholder like ADB. When we asked the Manila-based institution, we got the response we expected: that ADB “welcomes the move” as it will complement the bank’s infrastructure programs both in coverage and funding, and strengthen South-South cooperation — which Lan agreed with. “A major part of ADB is focused on infrastructure but I think ADB has been involved in many other development programs,” the professor said. “I think [the establishment of a regional infrastructure bank] is a very positive move in strengthening the collaboration among Asian countries. Infrastructure is key to development, so if we have a dedicated development or investment bank [for infrastructure] set up, it will push cooperation further and complement the role ADB is already playing.” Lan concluded: “I would argue that such an investment bank would probably have to learn from ADB a great deal because ADB already has accumulative and vast experience, so I think in ADB’s point of view, it’s a new partner that can help address a common problem.” As infrastructure and connectivity will be one of the main theme of ADB’s annual meeting in Astana, Kazakhstan, on May 2-5, it will be interesting to see if the possibility of a Chinese-led regional infrastructure development bank comes up and what comes out of those discussions. Read more development aid news online, and subscribe to The Development Newswire to receive top international development headlines from the world’s leading donors, news sources and opinion leaders — emailed to you FREE every business day.
China’s foreign policy is an issue that continues to polarize the international development community.
While Asia’s economic juggernaut is steadily becoming one the world’s fastest-rising emerging donors — with more than $6.4 billion in annual official development assistance, half of which goes to Africa — most observers remain clueless on how Beijing disburses these funds, what the country’s ODA policy really is, and how it views “development assistance” in terms of addressing the world’s humanitarian needs over its own commercial and economic interests.
Part of the reason why China’s aid activities continue to be shrouded in mystery — and even misery, some development experts would say — is the lack of centralized and accessible data on Chinese ODA.
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Lean Alfred Santos is a former 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. He previously covered Philippine and international business and economic news, sports and politics.