China’s aid ap­proach gains mo­men­tum

China Daily European Weekly - - COMMENT - Gu Chun The au­thor is a direc­tor of Com­mon Fu­ture, a Chi­nese NGO pro­gram for hu­man­i­tar­ian aid for refugees. The views do not nec­es­sar­ily re­flect those of China Daily.

Its for­eign as­sis­tance model will con­tinue to di­ver­sify and up­grade as na­tion takes on more re­spon­si­bil­i­ties

The con­cept of for­eign aid has at­tracted crit­i­cism since aid pro­grams started to take shape and be­come a def­i­nite com­mit­ment in the 1960s, when the first hu­man­i­tar­ian crises reached mass au­di­ences on tele­vi­sion.

Back then, the main­stream was in fa­vor of trade rather than aid. Yet five decades have passed and the de­bate is still un­set­tled, as many of the prom­i­nent fig­ures in devel­op­ment eco­nom­ics de­nounce for­eign aid, la­bel­ing it as an act to un­der­mine the devel­op­ment of lo­cal state ca­pac­ity.

The most re­cent and elo­quent bash­ing on for­eign aid came from An­gus Deaton. The No­bel Prize win­ner in eco­nom­ics, who stud­ied how the poor de­cide to save or spend, ar­gued that much of the $135 bil­lion (113 bil­lion eu­ros; £99.6 bil­lion) given away by the world’s most de­vel­oped coun­tries in 2014 was not well spent on poverty al­le­vi­a­tion. His fel­low No­bel lau­re­ate Muhammed Yunus shares this con­cern and goes to great ef­forts to con­vince pol­i­cy­mak­ers from the world’s largest donors to re­visit their coun­tries’ for­eign aid strate­gies and opt for a more sus­tain­able model, in­stead of sim­ply giv­ing hand­outs of food and checks.

The cri­tique from econ­o­mists and prac­ti­tion­ers in the in­ter­na­tional devel­op­ment arena in­di­cates that for­eign aid should fea­ture a self­sus­tain­ing pat­tern and stim­u­late growth. From this per­spec­tive, China’s for­eign aid model of­fers an al­ter­na­tive ap­proach that could lift the con­cept out of its cur­rent predica­ment.

China’s his­tory of pro­vid­ing for­eign aid could date back to the 1950s. De­spite a mod­est start, China is now the largest de­vel­op­ing coun­try aid provider — the Or­ga­ni­za­tion for Eco­nomic Co­op­er­a­tion and Devel­op­ment coun­tries re­main the largest con­trib­u­tors to for­eign aid. Ac­cord­ing to a pol­icy pa­per is­sued by the State Coun­cil in De­cem­ber last year, China has given about 400 bil­lion yuan ($61.64 bil­lion; 51.95 bil­lion eu­ros; £45.65 bil­lion) in devel­op­ment aid to 166 coun­tries and in­ter­na­tional or­ga­ni­za­tions over the past 60 years.

In fact, the most di­rect and re­mark­able change in China’s for­eign aid over the years is its ex­panded size and breadth. The OECD’s in­ter­na­tional devel­op­ment sta­tis­tics sug­gest that China’s pro­vi­sion of for­eign aid in 2001 was lim­ited and only ac­counted for 1.8 per­cent of the to­tal do­na­tion of OECD coun­tries. How­ever, the num­ber rose to 6.6 per­cent in 2013, with an av­er­age an­nual growth rate of 21.8 per­cent. The lat­est of­fi­cial white pa­per on for­eign aid, re­leased in 2014, fur­ther elab­o­rates that be­tween 2010 and 2012, China pro­vided 89.3 bil­lion yuan in for­eign as­sis­tance through grants, in­ter­est-free loans and con­ces­sional loans, mak­ing China the world’s 10th-largest donor.

In ad­di­tion, the num­ber of coun­tries to which China’s for­eign aid flows amounts to 92 across six geo­graphic re­gions (Africa, Latin Amer­ica, East Asia, the Mid­dle East, South Asia and Cen­tral Asia). Africa and Asia still ac­count for the lion’s share of China’s as­sis­tance. Africa ac­counted for 51.8 per­cent of the ag­gre­gate aid, ac­cord­ing to the 2014 white pa­per. This is not sur­pris­ing, since Africa is among the re­gions that are most in need of for­eign aid, and China has long-stand­ing ties with the con­ti­nent. This trend has been strength­ened since China es­tab­lished the Fo­rum on China-Africa Co­op­er­a­tion in 2000. Asia comes sec­ond as China’s for­eign aid re­cip­i­ent, tak­ing up 30.5 per­cent of the fund­ing.

A swift change in China’s aid pro­gram is its in­creased pres­ence in Europe, as China fun­neled 1.7 per­cent of its to­tal pro­vi­sion to de­vel­op­ing coun­tries in East Europe from 2012 to 2014. The amount stood at a mod­est 0.3 per­cent in 2009. Another change worth not­ing is that China’s aid to the least-de­vel­oped coun­tries has risen from less than 40 per­cent to 52.1 per­cent be­tween 2009 and 2012.

China’s for­eign aid pol­icy is premised on equal­ity of part­ners, mu­tual ben­e­fit and re­spect for sovereignty, with an em­pha­sis on en­hanc­ing the re­cip­i­ent’s self-reliance to nur­ture a sus­tain­able devel­op­ment path, which re­flects a win-win devel­op­ment equa­tion. This forms a vir­tu­ous cir­cle: The for­eign aid helps fos­ter eco­nomic growth pil­lars and im­prove the so­cial well-be­ing in low-in­come coun­tries, which in re­turn sup­ports the re­cip­i­ent coun­try’s devel­op­ment in the long run. And given that the devel­op­ment pat­tern could sus­tain it­self lo­cally, it does not place un­fair or ad­di­tional fi­nan­cial bur­dens on the donor coun­try’s do­mes­tic tax­pay­ers.

Another unique char­ac­ter­is­tic in the China for­eign aid model is the coun­try’s com­mit­ment to an aid pol­icy that comes with no strings at­tached. This is con­sis­tent with China’s Five Prin­ci­ples for Peace­ful Co-ex­is­tence, a guid­ing prin­ci­ple for for­mu­lat­ing broader for­eign poli­cies. China’s re­spect for self-de­ter­mi­na­tion and na­tional sovereignty in pro­vid­ing aid stands in stark con­trast to the more widely adopted model in the West, in which aid is con­tin­gent on the re­cip­i­ent coun­try’s con­sent to em­brace a free mar­ket or to build small gov­ern­ment, clauses col­lec­tively known as “Wash­ing­ton con­sen­sus”. China’s prac­tice pro­tects the re­cip­i­ent coun­try’s in­ter­ests and avoids po­ten­tial dis­putes on gov­er­nance.

China’s for­eign aid used to fo­cus on hard­ware in­fra­struc­ture con­struc­tion, in­clud­ing the trans­porta­tion, en­ergy and com­mu­ni­ca­tion sec­tors. In re­cent years, China has chan­neled more re­sources to the ca­pac­ity build­ing of its soft power in re­cip­i­ent coun­tries, which sig­nals a new chap­ter in its aid de­liv­ery strat­egy. As the 2014 white pa­per re­vealed, di­rect in­vest­ment in in­fra­struc­ture projects de­creased from 61 per­cent be­fore 2009 to 44.8 per­cent in 2012. In the mean­time, China held 1,951 tech­ni­cal and on-the-job train­ing ses­sions for al­most 50,000 of­fi­cials and tech­ni­cal per­son­nel from poor de­vel­op­ing coun­tries.

Ad­di­tion­ally, aid pro­grams have surged in ar­eas such as so­cial ser­vices, food se­cu­rity, med­i­cal care, gen­der equal­ity, dis­as­ter pre­ven­tion and re­lief. For in­stance, China ac­tively en­gages with global health diplo­macy and has ini­ti­ated a pro­gram that has trans­ferred more than 3,600 Chi­nese doc­tors to teach and sup­port lo­cal med­i­cal staff in more than 54 poor coun­tries.

On the in­ter­na­tional se­cu­rity and dis­as­ter re­lief front, China has be­come an ac­tive player, dis­patch­ing more than 30,000 peace­keep­ers to nine con­flicted coun­tries and re­gions in­clud­ing Afghanistan, Congo, Haiti and South Su­dan by 2016. Fur­ther­more, Pres­i­dent Xi Jin­ping pledged at the United Na­tions sum­mit in Septem­ber 2015 to es­tab­lish the China SouthSouth Co­op­er­a­tion and As­sis­tance Fund. An ini­tial $2 bil­lion has been com­mit­ted as a down pay­ment; the fund is pri­mar­ily des­ig­nated to im­prov­ing the gen­eral well-be­ing of the cit­i­zens of re­cip­i­ent coun­tries.

As one of the world’s largest donors, the United States, threat­ens to cut its spend­ing on for­eign aid, re­duc­ing it by $17 bil­lion in the 2018 fed­eral bud­get pro­posal, China’s sig­nif­i­cance in play­ing a more im­por­tant role in in­ter­na­tional devel­op­ment stands out. And China is ready to take on more re­spon­si­bil­i­ties un­der its Belt and Road Ini­tia­tive, since Pres­i­dent Xi com­mit­ted $124 bil­lion at the Belt and Road Fo­rum for In­ter­na­tional Co­op­er­a­tion in Bei­jing in May to spe­cial lend­ing pro­grams, and it plans to chan­nel al­most $9 bil­lion to food aid and poverty al­le­vi­a­tion projects in the next three years in de­vel­op­ing coun­tries along the Belt and Road routes.

We can ex­pect that China’s for­eign aid model will con­tinue to di­ver­sify and up­grade, through the as­sis­tance of the Asian In­fra­struc­ture In­vest­ment Bank and other mul­ti­lat­eral in­sti­tu­tions ini­ti­ated by the coun­try, and through bet­ter gov­er­nance, as Pres­i­dent Xi has ad­vo­cated that China should act more wisely in man­ag­ing for­eign aid to max­i­mize the so­cial gains.


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