What does China’s new White Paper on Aid need to say?

China is now one of the top 10 largest foreign aid donors in the world. Yet, much about its aid program is still shrouded in mystery. The release of the first white paper on China’s foreign aid in April 2011 was an important first step in China becoming more open about how its spends its aid. With the much-awaited second white paper due to be published soon, there are hopes and expectations of even greater transparency. This time round, it won’t suffice for Beijing to simply regurgitate old slogans or display aggregate data.

There are three core things the Chinese Government needs to include to make the next white paper more useful than the last.

1. A vision

The white paper should provide a clear articulation of the Chinese Government’s foreign aid objectives and how it will try to achieve them. The world is now well aware of the key principles underpinning China’s development assistance program: win-win, mutual benefit, non-interference, and so forth. But developing countries, other donors, and increasingly the Chinese public, want to know more.

The first white paper outlined the history of China’s aid program, its key components, and its basic features. The conclusion told us that China would “make efforts to optimize the country’s foreign aid structure, improve the quality of foreign aid, further increase recipient countries’ capacity in independent development, and improve the pertinence and effectiveness of foreign aid”. But that’s as visionary as it got.

2. Data

More specifically, data at the country-level. The first white paper gave us total figures across the entire program and its entire lifespan. So we know that up to 2009 China “provided a total of 256.29 billion yuan in aid to foreign countries, including 106.2 billion yuan in grants, 76.54 billion yuan in interest-free loans and 73.55 billion yuan in concessional loans”. We also know that 32.8% of funds went to Asia in 2009. But what we don’t know is which countries in Asia received Chinese aid. Nor how much they each received. It would be good to know, for example, what the priority countries or sectors will be over the next five years.

Any disaggregation by year, country, sector, or type will be an improvement and will signal that China is serious about increasing the transparency around its program.

3. An organizational flowchart

We know there are many actors involved in China’s foreign aid program. From policy leadership at the State Council, to program design in the Department of Foreign Aid within the Ministry of Commerce, to implementation by Chinese companies or healthcare workers. But how these different actors interact with and influence each other is less well understood. And the biggest black hole is the concessional loan program and the role of China Eximbank.

A white paper that clearly sets out the links between each of these actors will be extremely helpful. Not just for those of us researching and analysing Chinese aid, but more importantly, for officials in developing countries. In the South Pacific, for example, officials are often confused about which Chinese actors have decision-making authority. Chinese companies and businesspeople propose projects directly to government officials (or politicians), even signing MOUs and other project documents. But loan agreements sometimes haven’t yet been negotiated with China Eximbank or the Ministry of Commerce. This can lead to delays, confusion, misalignment of priorities, and accusations of corruption. Understanding the key actors involved and their true roles within the Chinese aid program will assist planning and help developing countries better manage Chinese assistance.

Not all donors are good at this. But the unclear links between the Chinese Government, state-owned enterprises, and commercial interests, make this more of an issue within the Chinese aid system.

So what is the likelihood of these components being included in the next white paper? If the first one is anything to go by, specific details will be limited. As I argued in Foreign Affairs last year, the aid department is relatively marginalised within the Chinese bureaucracy. Efforts to increase transparency or articulate policies face significant obstacles. Despite an ‘inter-agency coordination mechanism’, coordination and sharing of information remains difficult. As such, the concessional loan component of China’s aid program will continue to be the least well understood.

When asked about providing country-level data, the Chinese Government frequently cites concern with how this would be perceived by its partner countries, and also by the Chinese domestic population. The latter is a legitimate issue. The former is less convincing given that other donors’ budgets are available for all to see. China is beginning to develop individual country and/or regional plans. But these strategy papers are not likely to be made public. And little is known about whether and how they fit into the project planning process.

Just because it isn’t being made public in a white paper doesn’t mean important changes aren’t afoot. There are definite signs that China is seeking to improve elements of its aid program. But as China continues to expand its overseas development assistance, pressure to explain its program publicly will continue to mount, both at home and abroad. The first white paper was lauded merely for its existence. The second white paper on China’s foreign aid will need to be a significant improvement on the first to satisfy expectations.