Overview
China’s increasing influence in the international donor-funded market is more than obvious, with the country pumping billions in aid to developing countries every year. However, the ambiguity around its aid-related decision-making and distribution mechanisms adds to the paradox of its (non)donor status. While being among the world’s leading economic powers, China continues to present itself as a developing country rather than being a donor country. In an attempt to better understand this positioning, on 15 July DevelopmentAid held an interactive webinar on “China’s role in international development – key financing trends” which generated an open and active discussion between the audience and the invited speakers.
Our most recent event is one in a series of webinars organized by DevelopmentAid when leading experts, policymakers, and representatives of international organizations discuss the most salient topics related to the development sector. The starting point for the latest webinar was a recent report published on the Donor Tracker website in which Zoe Johnson and Raimund Zühr discussed certain trends relating to China’s financing for international development cooperation. Zoe and Raimund kindly agreed to act as speakers for our event.
The abovementioned report highlights that China’s Official Development Assistance (ODA) amounted to US$5.9 billion in 2019, making it the sixth-largest provider of ODA for that year. Nevertheless, it seems that China does not consider itself to be a donor country but rather a developing country that assists other developing countries. Based on these facts, our event moderator (Ion Ilasco) asked the invited speakers why China stayed in the shadows and what the reasoning behind that position was.
Noting that China’s influence will only grow in the years ahead, Zoe Johnson explained that China not being referred to as a donor country is the result of two mutually reinforcing elements. On one hand, there is a certain degree of Eurocentrism in terms of development, where richer nations from the global north provide funds for development to poorer nations in the global south. China does not participate in many of these international systems and neither does it report to the Organization for Economic Cooperation and Development (OECD), the Development Aid speaker noted.
On the other hand, there is China that sets itself apart from this global system by using different methods to frame development assistance.
“China really sees itself as equal to the countries that it has been supporting and conceptualizes this assistance as more of a mutual process through which it shares its own experience of development in a give-and-take form,” Zoe said.
Between 2013 and 2018 China spent around US$42 billion, or US$7 billion annually on average, with just over half of those funds taking the form of loans and the other 47% were grants. Compared to the previous time frame (2010-2012), it can be observed that not only has China’s spending on foreign assistance increased over time but also the proportion between loans and grants has changed.
Fig.1. China’s annual foreign assistance by type of flow (US$ billions)
Source: Donor Tracker: A New Era? Trends in China’s financing for international development cooperation
Zoe also highlighted that China focuses the largest share of its assistance efforts around the least developed countries in Africa and Asia. This is very much in line with the goals of poverty alleviation stated in the latest White Paper.
Fig.2. China’s annual foreign assistance by recipient region (US$ billions)
Source: Donor Tracker: A New Era? Trends in China’s financing for international development cooperation
For his part, Raimund revealed several trends to note with regard to China’s foreign assistance:
- Bilateral flows remain predominant but multilateral commitments are an increasingly important component of China’s development cooperation, particularly as part of its global response to COVID-19
- China’s longstanding sectoral priorities include agriculture, infrastructure, and trade but governance, climate, health, and humanitarian assistance are gaining increased attention
- Transparency around Chinese development finance remains a challenge despite apparent efforts on the government’s part to improve communication and accountability
- China’s importance as a global development actor will continue to grow and its institutional capacities and approaches will develop in parallel
For those who did not have the opportunity to join us for this online event, a link to the recorded version can be found here.
We invite you to join us for our next webinar on “An Overview of the AfDB’s Procurement Policy: How to Prepare Correctly for Upcoming Bids?” which will take place on 29 July 2021 at 4 pm (Brussels Time)/10 am (Washington DC Time). Ashraf Ayad, the Lead Procurement Policy Officer at the African Development Bank, will speak about the Bank’s procurement policy and investment strategy as well as the best practices in the preparation of successful proposals.
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