A closer look at the risks and opportunities of China's aid to Africa

The debate over China's oft-misunderstood approach to aid and development has almost always focused on the motives of the East Asian country, as the donor, and never those of the governments and leaders that receive the assistance. How important is it to see the other side of the story - why governments accept the assistance - and how will it affect the effectiveness of the development programs that the Asian behemoth is funding seemingly at will?

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Abstract

Chinese “aid” is a lightning rod for criticism. Policy-makers, journalists, and public intellectuals claim that Beijing uses its largesse to cement alliances with political leaders, secure access to natural resources, and create exclusive commercial opportunities for Chinese firms—all at the expense of citizens living in developing countries. We argue that much of the controversy about Chinese “aid” stems from a failure to distinguish between China's Official Development Assistance (ODA) and more commercially oriented sources and types of state financing. Using a new database on China's official financing commitments to Africa from 2000 to 2013, we find that the allocation of Chinese ODA is driven primarily by foreign policy considerations, while economic interests better explain the distribution of less concessional flows. These results highlight the need for better measures of an increasingly diverse set of non-Western financial activities.

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