Focus: Development finance in Africa

Not long ago, the lion's share of official aid to poor countries was provided by rich Western governments that carefully report what they give and to whom. But recent years have seen a rapid increase in aid from non-Western sources that do not always prioritise transparency. A new working paper from the Centre for Global Development (CGD) attempts to gauge aid flows to Africa from China, one of the more opaque givers. In the absence of comprehensive official figures, the CGD compiled a database using open-source media reports. It says that China committed $75 billion in aid between 2000 and 2011, almost as much as America ($90 billion) and nearly a fifth of the total flows reported by Western governments. Two of the largest identifiable categories, by value, were transport and energy, which could fuel suspicions that China's provision of aid is aimed at securing natural resources. But the counter-argument holds that Chinese aid, which focuses on overlooked areas like infrastructure, rather than education or health, is actually complementary to the West's.

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Abstract

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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