Unraveling the Controversies of Chinese Foreign Aid

Unraveling the Controversies of Chinese Foreign Aid
Photo Credit: AP / TPG Images

What you need to know

China’s new aid and security pact with the Solomon Islands is the latest case to raise the question of whether Chinese aid is developmental or a political.

By Jing Gu

China’s growing role as a provider of development assistance, and the broader impact of its international economic engagement, has been the subject of considerable interest both within and outside China. The question of whether Chinese development policy is about cooperation or competition has fascinated the world. Whether their intentions are benevolent or power driven often dominates discussions. China’s new aid and security pact with the Solomon Islands is the latest case to raise the question of whether Chinese aid is developmental or a political.

Over the past decade, the concepts and policies of China’s development strategy have evolved dramatically. Since 2013, the volume and geographical coverage of Chinese foreign aid has increased steadily, marking a new era in development cooperation. From 2013 to 2018, China provided more than 27 billion RMB (US$ 4 billion) to other developing countries. Since the beginning of the Covid-19 pandemic, China has provided humanitarian aid, in the form of personal protective equipment, vaccines, and medical teams, to 53 African countries and the African Union. 

China began providing assistance to developing countries in the 1950s. But aid is only a small part of China’s development cooperation, which also entails trade, loans, and capital investments. Beijing’s 2021 White Paper lists technical cooperation, debt relief, and projects as major forms of Chinese aid. Of these foreign assistance projects, most of the money is spent on economic infrastructure, followed by industry, energy and resource development, agriculture and developmental peace collaboration including United Nations peacekeeping operations. 

China’s approach to global development has been shaped by two important policy frameworks on development in recent years. The 14th Five Year Plan, adopted in March 2021, focused on the concepts of high-quality, sustainable growth and green development. 

The second key policy framework is China’s “people-centred new development philosophy.” The Global Development Initiative (GDI) and the Global Security Initiative (GSI) — intended to uphold the principle of “indivisible security” — were proposed by Chinese President Xi Jinping on September 21, 2021 at the 76th United Nations General Assembly and the Boao Forum for Asia Annual Conference on April 24, 2022. Initially, the GDI was understood as an extension of previous projects such as the Belt and Road Initiative (BRI) announced in 2013. 

But both the GDI and the GSI are different in that they respond to emerging changes in the international sphere. They are designed to address significant challenges emerging from climate change, the Covid-19 pandemic, tensions between China and the West, and the United Nations 2030 Sustainable Development Goal.

To reflect these changes, China established the Center for International Knowledge on Development in August 2017. The purpose of the Center is to research and communicate Chinese development knowledge. The Center also researches the international competitiveness of other countries’ manufacturing capacity, financial stability, environmental sustainability, and global public goods. 

These rapidly evolving activities present both internal and external challenges for China and the world. The way in which these challenges and knowledge gaps are addressed will not only determine China’s internal governance on development issues, but also its external activities and initiatives.

Tension between the West and China has arisen over China’s approach to international development and Chinese multilateralism. These tensions are also evident in the case of development finance. But Chinese innovation in multilateralism and development is a complex picture. The Asian International Investment Bank clearly represents China’s wish to operate within the existing system of international development banking but, at the same time, achieve innovative changes. 

The Bank closely follows Western concepts of organization and rules and has achieved a great deal of Western participation. Its success depends on its credibility in world financial markets. It does not provoke significant criticism despite its departure from the institutional model of the World Bank and other regional development banks.

Developmental peace is another area of disagreement between China and the West. Disputes arise over whether economic rights have priority over political rights in the context of the Global South. While China does not formally prioritize economic rights, in practice they consider peace and stability in the Global South to be a key part of sound economic infrastructure and stable social development. 

China is militarily involved in United Nations peacekeeping, but it does not involve itself in the development of political institutions, as it considers this to be a matter of domestic concern. But the logic and language of security and capital have changed over the last three years. Increasingly, peace and security dominate China’s development policy discourse. 

China’s approach to international development and multilateralism is underscored by efforts to avoid the “Thucydides trap,” a situation in which war is likely to break out as one great power displaces another. China has attempted to steer away from this by promoting the philosophy of “a community with a shared future for mankind’. 

Chinese policy has aimed for the expansion of common standards for global economic and social development. In Chinese theory and practice, this is achieved through connectivity between countries and multi-layered global governance. But the terms and conditions of cooperation agreements are often very general, and depend upon continued collaboration between parties without independent adjudication. 

Clearly delineating the roles that the GDI, GSI, and BRI can play in international development will provide clarity on China’s mission and help deliver its vision for the world.  

Jing Gu is a Senior Research Fellow, Director of the Centre for Rising Powers and Global Development and Director of the China Centre at the Institute of Development Studies.

The News Lens has been authorized to republish this article from East Asia Forum. East Asia Forum is a platform for analysis and research on politics, economics, business, law, security, international relations and society relevant to public policy, centered on the Asia Pacific region.

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