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Center for Global Development (CGD)

The Chinese Aid System1

Carol Lancaster1

Center for Global Development (CGD)

June 2007

SARPN acknowledges CGD as a source of this document:
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China has become a major source of foreign aid in Asia, Latin America and especially in Africa. It has provided aid to these regions since the 1960s in support of its recognition as the legitimate representative of the Chinese people and of the Chinese seat in the United Nations. Today, Chinese aid appears tied more to Beijing’s interests in raw materials, such as oil, minerals and timber, necessary to fuel its incredible growth machine. It, like nearly all aid-giving governments, also has political and strategic interests it pursues with its aid—dissuading governments from providing diplomatic recognition to Taiwan, reportedly discouraging governments from supporting Japan for a seat on the UN Security Council, bolstering its expanding diplomatic presence world wide and creating warm relations with developing countries that will produce support for Chinese policies in international fora.

We know quite a lot about Chinese aid—we know that Africa is a particular focus of that aid with Beijing’s promise to double aid to the region by 2009. We know that the Chinese provide their aid largely without the conditions that typically accompany Western aid—a good human rights performance, strong economic management, environmentally responsible policies and political openness on the part of recipient governments. We know that Chinese aid emphasizes infrastructure, something many poor countries need and want but often find traditional Western aid donors reluctant to fund. We know that the Chinese are expanding their scholarships for training individuals from developing countries and are providing medical assistance to a number of poor countries. We are aware that Chinese aid is provided typically in the form of concessional loans.

Some of these practices on the part of the Chinese have become a source of concern to Western aid agencies—will Chinese aid discourage needed economic and political reforms in African countries? Will it burden poor countries with debt—a burden from which many have only just escaped with the debt cancellation policies adopted by many aid agencies?

In addition to these concerns, there is a lot we do not know about Chinese aid—how large it is and how fast it is growing; how decisions are made on how much aid is provided every year; which countries receive it and how much they get; how the aid is managed within the Chinese government and how it is evaluated. Whom should we talk to in the Chinese government about aid policies? How can we engage the Chinese more directly in the existing international aid effort?

This note provides preliminary answers to some of these questions, based on available studies, documents, news reports and a series of interviews with Chinese aid officials in Beijing. It is far from the last word on these questions but an early effort to flesh out what is a complicated and rapidly evolving system of decision-making and management of aid in the world’s most dynamic country.

  1. Carol Lancaster is a visiting fellow at the Center for Global Development and associate professor and former director of the Master of Science in Foreign Service Program in Georgetown University's School of Foreign Service.

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