How Do You Track Chinese Development Finance? You Have to Follow the Money!
Tuesday, April 30, 2013 Author:
Chinese development finance activities in Africa often provoke strong reactions -- both positive and negative. Yet they remain poorly understood. Scholars, policy analysts, and journalists who study Chinese aid and investment operate in an information-poor environment. Beijing does not release country-level or project-level data on its overseas development activities.
In the absence of reliable and comprehensive official data, many researchers have turned to media reports to track China’s activities on the continent. Even the U.S. Government uses media reports to track Chinese development finance activities. However, as Deborah Brautigam points out, many of these media-based studies on Chinese ‘aid’ have run into major challenges. Chief among them: the temptation to lump together and aggregate all projects reported in the media as “aid” without investigating the terms of the agreement or the status of each project.
AidData’s media-based data collection (MBDC) initiative is based on a simple but important insight: if you want to know what the Chinese are really doing in Africa, you have to follow the money. It's not enough to rely on grand announcements that Chinese Ministry of Commerce officials may make with African government counterparts at the presidential palace. Nor will ribbon-cutting ceremonies do. If you want to know what the Chinese are funding in Africa (or anywhere else for that matter), you have to follow a project through its full life cycle. To this end, our team invested thousands of hours of sweat equity in the creation of a “Project Status” variable. By tracing the progression of projects over time and triangulating a wide variety of sources (all of which are posted on the individual project pages on china.aiddata.org), we categorized each record in our database as either a pledge, an official commitment, a project in implementation, a completed project, or a suspended/cancelled project. Our methodology provides a more detailed description of how this variable was defined and measured. While this variable will no doubt be updated and refined over time, we believe it is a big step in the right direction.
In order to understand the importance of the tracking a project's status before drawing conclusion about how much development finance China is pumping into Africa, consider Figure 1, which illustrates the project status composition of Chinese official finance to Africa from 2000 to 2011.
|Figure 1: Share of each reported status of all projects over time, 2000-2011|
The numbers are striking. In an average year, only about half of the projects in our dataset have been reported as implemented or completed. In monetary terms, the total value of all reported official finance projects, excluding cancelled and suspended projects, is $101.26 billion. However, when pledged projects are eliminated, this figure drops to $75.4 billion. If one excludes pledges and official commitments, the estimate falls even further -- to $48.6 billion. When one excludes all projects except those that have been completed, the number drops again to $19.4 billion over the 12-year study period. Had we not created the project status variable, we would have severely inflated our estimates of Chinese official finance to Africa.
It is also important to bear in mind that these figures do not represent ‘aid’. We are using a measure of official finance, which includes official development assistance (ODA), other official flows (OOF), and a third residual category (Vague Official Finance) which captures activities that could not be classified as ODA or OOF because of insufficient information. We tracked $13 billion in ODA-like commitments during the study period, or roughly $1.1 billion annually. Our recently-published CGDWorking Paper provides a more detailed discussion of these estimates.
Given that the initial dataset of Chinese official finance contains 1,693 projects, we harbor no illusions that every project ID has been coded with 100% accuracy. Therefore, we are committed to improving the data as (potential) errors are identified and new sources of information are supplied. By disclosing all of our methods and sources, our hope is that users of the data on the china.aidata.orgplatform will help us provide a reliable and up-to-date resource on Chinese development finance activities in Africa. We are particularly interested in crowdsourcing information and insights from those who do field work and case study research in Africa. If we succeed in this endeavor, it is our expectation that fewer and fewer journalists and scholars will make big statements that rest on flimsy empirical foundations.
Austin Strange is a Research Associate at AidData.
Tags: south-south cooperationmedia-based data collection (MBDC)China in AfricaInnovation