China’s Foreign Aid White Paper: a Victory for the Aid Transparency Movement?

Chinese foreign aid has long been a subject of scrutiny and controversy. It doesn’t easily fit into the OECD’s definition of Official Development Assistance (ODA). Much is financed through the China Eximbank in the form of concessional loans that directly support Chinese economic interests, and carried out by embassies and consulates rather than development agencies. Most importantly, project-level data on Chinese aid is essentially non-existent (or, if it exists, the government is not sharing it with the rest of the world). As a result, scholars, policy-makers, and aid workers have agonized over the true nature of Chinese development assistance – whether it really helps recipient nations develop, or simply feeds China’s appetite for extractive resources (read Deb Brautigam’s blog for more discussion of the myths and realities behind Chinese aid).

AidData’s experience exemplifies the difficulty of locating comprehensive data on Chinese aid flows. By scraping the China Commerce Yearbook and the Almanac of China’s Foreign Economic Relations & Trade, published annually by China’s Ministry of Commerce, BYU professor Dan Nielson and his students were able to obtain project-level data for “comprehensive projects completed” between 1990 and 2005 (see a summary of the project and download the data here). However, a significant amount of project-level data is missing, including commitment amounts for most projects.

This is why I was surprised when, on Thursday, April 21st, the People’s Republic of China (PRC) provided a rare glimpse into the mechanics and history of its aid program, releasing a white paper summarizing its foreign aid activities since 1950. Why now? What is the motivation behind this sudden effort to 'set the record straight'?

One possible explanation is that the PRC “is learning the limitations of noninterference." Stephanie Kleine-Ahlbrandt and Andrew Small argue in a 2008 Foreign Affairs article that as its international diaspora and foreign investments have expanded, “China has had to devise a more sophisticated approach to protecting its assets and its citizens abroad,” and has therefore taken a more active role in denouncing states that violate human rights (e.g. North Korea, Sudan, and Burma). Pan of the Council on Foreign Relations also calls attention to the fact that the Chinese government has invested more heavily in its soft power, i.e. its ability to influence “by persuasion and appeal rather than by threats or military force.”

The effectiveness of China's foreign assistance is likely correlated with the country’s ability to exercise soft power. When critics charge that Chinese contractors do “shoddy work," or that Chinese aid robs developing countries of natural resources without providing jobs in return, the country's reputation suffers.

A quick scan of the PRC's white paper suggests that the government is mindful of these criticisms and wants to reframe the discussion. It draws attention to the mutually beneficial nature of its support and positions China as a “friend” of developing nations that engages in "South-South cooperation." According to the paper, China’s inexpensive loans have helped nations “build up their self-development capacity” and “foster local personnel and technical forces.” The paper also tries to lower expectations by emphasizing the fact that it remains a developing country with constrained resources and significant domestic challenges: “Over the years, while focusing on its own development, China has been providing aid to the best of its ability to other developing countries with economic difficulties.”

China’s white paper also attempts to dispel myths about the type of aid it actually provides. For example, whereas China’s investment in energy and resource extraction has drawn considerable criticism, the paper asserts that the majority of Chinese concessional loans (61%) support “economic infrastructure,” and only 8.9% of its loans support “energy and resources development.” China has also funded clean energy initiatives and trained over 1,400 people in developing countries on how to develop and use renewable resources.

According to the white paper, the majority of China’s development financing through concessional loans has targeted economic infrastructure, as opposed to energy and resources development (see page 5).

The one criticism the paper fails to address, as the Guardian points out, is the Chinese government’s lack of transparency. The paper provides some aggregate funding statistics, but it does not provide the granular project-level detail necessary to monitor the nature of the country’s specific development assistance activities. Nor does it define how China categorizes aid projects, which makes it virtually impossible to know what types of activities fall under each sector indicated in the report. To verify any data presented in the white paper, one would need detailed sector descriptions and project documents that clearly describe goals, activities funded, financial details, financing and implementing organizations, and other fields for each project (Publish What You Fund uses seven AidData fields to assess the quality of donor data – see page 67 of their 2010 Aid Transparency Assessment).

Releasing the project-level data that would enable independent evaluators to assess the nature and impact of Chinese foreign assistance would be a great next step.

Peter Bergen is a former AidData Research Assistant.He graduated from the College of William and Mary with a BA in international relations in May 2010.