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Rise of the Dragon – The Importance of China’s Unorthodox Foreign Aid

China has risen to become an unlikely leader in the global development arena – the Chinese Communist Party’s (CCP) foreign aid program is now the sixth largest in the world. The country is at the forefront of a new era of global development that is characterised by the growing participation of new emerging donors and the diminishing role of traditional ones. Championing South-South cooperation and against the backdrop of the new Asian-led AIIB, China looks set to blow an influential breath of fire into the development landscape.

However, China’s foreign aid program is an unorthodox one. It is subject to much scrutiny and criticism and features the lack of transparency and access to data that is no less characteristic of such a heavily state-controlled regime. As a non-member of the OECDDAC and thereby not obliged to uphold global development norms, nor promote human rights or democracy, China’s aid program is argued to both undermine ‘good governance’ and to challenge the influence of traditional Western donors. Perhaps it is this perceived ‘challenge’ of influence and the rise as an alternative to traditional Western aid that is at the root of some of the criticism.

In July 2014, Beijing released the second White Paper on China’s Foreign Aid which provided a vague overview of the regional allocations of funds and an aggregate budget of foreign assistance (mostly bilateral) from 2010 – 2012. According to the paper, during this three-year period China provided more than US $14.41 billion of aid to 121 countries – 58% of which were in the African region, 30% in the Asian region and almost 2% in Europe. According to a study undertaken by the JICA research institute, China’s foreign aid expenditure in 2013 was calculated to total more than $7.1 billion USD, with only the UK, USA, Germany, France and Japan providing a larger budget. Needless to say, China is a significant player in the delivery of global aid funds and the JICA expects Beijing’s aid budget to rise significantly in coming years.

While observers question the motives of China’s proliferating foreign assistance – connected to business contracts, geopolitical footholds and quests for natural resources – pursuit of national interest has not been mentioned as a driving factor, if at all. On the contrary, the 2014 White Paper notes “one of the important objectives of China's foreign assistance is to support developing countries to reduce poverty and improve the livelihood of their peoples”. While development aid in nature may not be completely selfless and altruistic, this is in direct contrast to countries like Australia, whose foreign aid program is now explicitly delivered to serve the main purpose of “promoting Australia’s national interests”.

The role that Chinese aid and development agenda is assuming, regardless of its unorthodoxy and inundations of criticism, is an important one. China sees its aid program as different to that of traditional donors and does not want to be grouped as part of the ‘Western donor club’. This has been symbolically important for China’s leadership in reviving South-South cooperation and will continue to play a role in the nation’s growing soft power. The 2014 White Paper China expressed a willingness to work together with the international community to meet the challenges of global development. Despite the lack of detailed information in China’s White Paper on Foreign Aid, most importantly it demonstrates Beijing’s efforts to become more transparent in the eyes of both North and South nations. It is interesting that Beijing seems to want the same benefits as a legitimate Western donor in regard to partnerships with international organisations and participation in initiatives, but still wants to firmly promote itself as a South nation.

Perhaps most important is that China, with an aid focus on economic development and capacity building, is filling the crucial infrastructure gap that is hindering nations from achieving long-term and lasting development. While China has been criticised for not separating its development assistance and commercial loans in its economic policy, its role as a development financer is crucial. The founding of the new characteristically Asian development bank, the AIIB, has been the climax of ushering in a new era of South-South development cooperation that is being led with ‘Chinese characteristics’.

Luisa Cools is the China Fellow for Young Australians in International Affairs.

This article can be republished with attribution under a Creative Commons Licence. Please email with any questions or for more information.

Image Credit: davidgsteadman (image cropped) (Flickr: Creative Commons)


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