Published daily by the Lowy Institute

China's aid program: Why the numbers matter

China's aid program: Why the numbers matter

Dr Philippa Brant is a Lowy Institute Research Associate.

China’s aid policy, like almost everything China does on the world stage, attracts close scrutiny and often criticism. The forthcoming release of China’s second White Paper on Foreign Aid (likely within the next month) will again focus attention on Chinese aid practices around the world. While this new White Paper is likely to be an improvement on China’s first, it is unlikely to provide the kind of detail that outside observers desire.

Mis-perceptions about the size of China’s aid program continue to abound. Deborah Brautigam, writing on her China Africa Real Story blog earlier this week, launched an exasperated attack on the WSJ/Rand report that claimed China’s aid program stood at $189 billion in 2011. The reality, as Brautigam points out, is closer to $10 billion.

As I tweeted at the time, not all ‘government-sponsored’ funding is aid. China’s first foreign aid white paper clearly stated which parts of its funding counted as aid:

Financial resources provided by China for foreign aid mainly fall into three types: grants (aid gratis), interest-free loans and concessional loans. The first two come from China's state finances, while concessional loans are provided by the Export-Import Bank of China as designated by the Chinese government.

Other types of loans from China Eximbank, as well as financing providing by China Development Bank (CDB), do not count as ‘foreign aid’ and should not be included in figures comparing China’s aid with other donors. Doing so only gives ammunition to those who argue China’s aid is a ‘threat’.

People are right to point out that the Chinese Government’s lack of transparency about its foreign aid program is a big part of the problem – though there is now plenty of good, accurate analysis from the likes of Brautigam for this to no longer be an excuse. [fold]

As I argued in my recent piece in Foreign Affairs, increasing transparency about its aid program is actually more complicated for China than one would expect. There are a number of domestic reasons that limit China from being more like Western donors in this regard.

China doesn’t have a central aid agency in charge of its aid program. Many actors are involved, often with competing interests. And despite the establishment of an ‘inter-agency coordination mechanism’ in 2011, the sharing of information within the Chinese bureaucracy remains subject to political constraints, including that many components are still regarded as state secrets.

In addition, foreign press reports about Chinese aid are increasingly scrutinised by the Chinese public, particularly the ever-vocal netizens, many of whom question why the Chinese Government is directing resources to other countries when there is still so much need for assistance at home.

So while there is an important role for commentators as well as developing countries to press for greater information from China about its aid program, it is also important to recognise the domestic constraints. And reports that exaggerate the size of China’s aid program harm the efforts of those within China who are working to improve the transparency of its foreign aid.

You may also be interested in