How 'rogue' is China's aid?
In May Chinese Premier Li Keqiang pledged $12 billion in new development assistance to African governments and promised technology transfers to make high-speed rail a reality on the continent. His pledge reflects China"s rise to the status of major player in global development finance, with annual development assistance equaling or surpassing aid from the United States, the biggest player in the aid game. In addition, China has had a meteoric rise as an international trader and source of foreign direct investment (FDI).
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.