New white paper outlines China's development past and future

Containers on a quay at the China-Kazakhstan logistics terminal in Lianyungang city, east China's Jiangsu province. The terminal is seen as a platform for goods from central Asian countries to go overseas and a boost to the construction of the Silk Road Economic Belt. Photo by: Geng yuhe / Reuters

The Chinese government has published a white paper outlining its work on international development cooperation, laying out a mission for its young aid agency, and putting forward its vision for the future.

Beijing is targeting both an international and a domestic audience with the white paper, which comes on the heels of China reporting that it had met its goal of eradicating rural poverty by the end of 2020.

“The paper’s framework is very positive in regards to international development cooperation,” said Hannah Muthoni Ryder, CEO of Development Reimagined, a consulting firm based in Beijing.

While many countries are cutting aid budgets, the white paper indicates that China is expanding its foreign aid funding and making it more concessional. It appropriated about $41.8 billion between 2013 and 2018, with about 47% coming in the form of grants, 48% as concessional loans, and 4% as interest-free loans, according to the white paper.

“Some had dismissed China’s interest in the multilateral system as PR related, but we see here they thought about the technical opportunities of cooperation in support of the Agenda 2030.”

— Kristen Cordell, fellow, the Center for Strategic and International Studies

That compares to a total of $14.41 billion in foreign aid funding with 36% grants, 56% concessional loans, and about 8% in interest-free loans between 2010 and 2012, according to a previous white paper on China’s foreign aid published in 2014.

The “strong narrative around China’s responsibility to the rest of the world,” and about showing solidarity with the rest of the world by supporting global public goods, is targeted at a domestic audience, Ryder said. Language around how China prioritizes the needs of its south-south partners meanwhile, is “internationally focused and crafted in such a way that it brings out contrasts between China and other developed countries’ approach,” she added.

The 45-page document goes into detail about how China is supporting the 2030 Agenda for Sustainable Development including through poverty reduction efforts, supporting agricultural productivity to address food security, improving health care systems, and supporting education.

The paper also outlines where the funding is going by region — 45% of funding between 2013-2018 went to Africa, with 37% going to Asia and 7% going to Latin America and the Caribbean — and the types of projects China has funded, from 58 hospitals to 86 schools and 56 transport projects.

What this paper doesn’t include, that Ryder thought it might, was a more detailed breakdown by country of where Chinese aid is going.

“This is not a response to the international community for transparency in Chinese aid but is giving a number of clear messages about what the direction of China’s foreign aid is,” she said.

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While the white paper includes few surprises and little new information it is the first time that the Chinese government has articulated the connection between its Belt and Road Initiative and its development cooperation agenda. BRI is mentioned repeatedly as an “overarching, driving force for foreign aid,” she said — the clearest articulation yet from Beijing.

Development experts have raised concerns over the BRI, highlighting issues around debt sustainability and a lack of adherence to international standards. The trillion-dollar initiative has also faced criticism over how the government has framed it as a global public good rather than an infrastructure investment initiative between China and low- and middle-income countries, Devex reported.

A new mandate

This is the first white paper released since China launched its own development agency and it outlines the mandate of the agency, said Kristen Cordell, a fellow at the Center for Strategic and International Studies’ project on prosperity and democracy.

The paper describes the creation of the agency as a milestone and says “it serves to better plan and coordinate efforts on international cooperation and build synergy for development.”

In part in response to critiques that China has an ad hoc approach to foreign assistance the paper also lays out a lengthy articulation of the country’s vision of strategic assistance moving forward, Cordell said.

“Some had dismissed China’s interest in the multilateral system as PR related, but we see here they thought about the technical opportunities of cooperation in support of the Agenda 2030,” she said.

There are a few areas to watch, experts said, including the south-south cooperation fund, China’s work with multilaterals, and trilateral cooperation as well as its creation of a statistical data information system.

The South-South Cooperation Assistance Fund launched in 2015 with an initial commitment of $2 billion and received an additional $1 billion contribution in 2017.

“It embodies China’s effort to value and bolster South-South cooperation and demonstrates that as a major country, China honors its responsibilities and welcomes other countries to board the express train of its development to achieve common progress,” notes the paper.

The narrative around south-south cooperation often appeals to LMICs who prefer being seen as partners rather than having a donor-recipient power relationship. But that can also have negative consequences, and China has been accused of failing to use aid to promote good governance and respect for human rights, saddling countries with unsustainable debt, and potentially perpetuating poverty by exploiting countries for their resources, strategic geographies, or China’s economic gain.

The paper also outlines efforts to better manage foreign assistance, including by improving evaluation of foreign aid projects and feasibility studies, and defining project management rules and regulations — areas in which China has come under fire in past projects.

China will also work to “revise and improve the statistical indicator system of foreign aid and develop a modern statistical information system for foreign assistance,” the paper says. What exactly that means or how it will interact with global systems is unclear and something to watch, experts told Devex.

Those discussions about how to better manage aid could be an indication of evolution, but there remain few examples of untied aid in Chinese foreign assistance, Ryder said.

“There are obviously challenges in the way China’s aid is structured and it’s not clear they are suggesting further changes in structure or to deal with issues of tied aid,” she said.

About the author

  • Adva Saldinger

    Adva Saldinger is a Senior Reporter at Devex, where she covers the intersection of business and international development, as well as U.S. foreign aid policy. From partnerships to trade and social entrepreneurship to impact investing, Adva explores the role the private sector and private capital play in development. A journalist with more than 10 years of experience, she has worked at several newspapers in the U.S. and lived in both Ghana and South Africa.