BY SAM BYFIELD | MARCH 14, 2012
The first White Paper on China’s aid program was released in 2011. The White Paper noted that from 2004-2009 China’s aid program increased by roughly 30 percent each year. In 2009 China provided over 250 billion yuan (around $US 40 billion) in aid, consisting of approximately 41% in grants, 30% in interest free loans, and 29% in the form of concessional loans. The White Paper notes that China’s aid focuses on agriculture, economic infrastructure, public facilities, education, health care, and, increasingly, climate change. While China itself is still a developing country, this level of expenditure establishes it as a major global aid donor.
In a similar, though perhaps more overt way to the aid programs of other countries, China’s aid program is based on both China and the recipient country benefiting (particularly economically) and is closely tied into China’s broader foreign policy aims. China’s aid has served as a tool to dissuade governments from providing diplomatic recognition to Taiwan, discourage governments from supporting Japan for a seat on the UN Security Council, enhancing its global diplomatic presence and creating warmer relations with developing countries to garner support for China’s policies in international fora. Some commentators have noted that China’s aid program also serves its own development needs, facilitating the export of raw materials to China, and requiring that 50% of project materials and services are sourced within China. This contrasts with the aid programs of the United States, United Kingdom, Australia and most other major aid donors, which are generally removed from their own economic development aims. Many Chinese funded public works – like stadiums, bridges or dams — tend to be highly visible and offer tangible benefits; and such activities are often announced at bilateral summit meetings, acting as a powerful symbol of friendship between China and other countries. Accordingly, Chinese aid can be seen not only as serving ‘hard’ diplomatic and security interests, but also as an example of Joseph Nye’s notion of ‘soft power’.
China’s aid to Africa, which has increased substantially over the past few years, illustrates many of these points. The White Paper indicated that for the 2009 fiscal year, nearly half (46.7 per cent) of Chinese aid was committed to Africa. Chinese aid in Africa can be viewed as contributing to the diplomatic objective of forging friendships with ‘non-aligned’ nations and competing with Taiwan for diplomatic recognition. On this point China has been successful, with only four countries in sub-Saharan Africa still maintaining official relations with Taiwan. By the same token, however, China is hardly unique in linking international development assistance to broader foreign policy objectives.
China’s aid program in Africa is also widely seen as focusing on its objective of securing oil, minerals and broader trade opportunities for its growing economy. An article in the Economist noted that ‘China has become the continent’s most important trading partner after America; trade between Africa and China has surged from just over $6.5 billion in 1999 to $107 billion in 2008.’ African oil reportedly accounts for 80 percent of China’s trade in the region and about one third of its oil imports. China’s aid projects are often backed by the natural resources of recipient countries. In war torn Angola, for instance, reconstruction was helped by oil-backed loans from Beijing, under which Chinese companies have built roads, railways, hospitals, schools and water systems. Nigeria took out two similar loans to finance projects that use gas to generate electricity. As a 2010 article in Foreign Affairs noted, in poor, oil-rich countries, which are often cursed by their mineral wealth, ‘resource-backed infrastructure loans can act as an ‘agency of restraint’ and ensure that at least some of these countries’ natural resource wealth is spent on development investments.’ This leveraging of natural resources in Africa closely resembles the relationship between Japan and China in the 1970s and 1980s, where China leveraged its natural resources to receive loans and access to much-needed infrastructure and modern technology.
* Sam Byfield works as a policy adviser in the in-ternational development sector and was a delegate at the inaugural Australia China Youth Dialogue in 2010.