Posts

, , ,

The Rapidly Evolving Nature of China’s Foreign Aid

China’s Foreign Aid
The pathway of China’s development in foreign aid has strongly correlated with its own trajectory of economic and diplomatic development. China’s foreign aid programs have matched with its modernization over the past seven decades, going from limited in scope to becoming both global and influential.

China’s Development Regarding Foreign Aid

For instance, four noticeable and distinct time periods showcase China’s approach toward foreign aid. In its first phase, from 1949 to China’s adoption of Reform and Opening-up Policy in 1978, its foreign aid was primarily ideological and centered around competing with Taiwan for diplomatic recognition as the rightful claimant to China following World War II. For instance, China utilized aid in order to encourage countries to vote favorably for or side diplomatically with China in international institutions. By the end of 1975 during the cultural revolution, foreign aid had amounted to 5.9% of total government spending. For comparison, in recent years, the United Kingdom’s spending on foreign aid peaked at 0.7% of its GDP. Following the Reform and Opening-up Policy, aid took a complementary role to diplomatic cooperation and trade and shrank in ideological orientation.

China’s third phase of aid focused on international institutions as China became increasingly involved in international organizations, treaties and the global economy. Since 2013, in its most recent orientation, foreign aid has matched step with China’s greater economic role in the world as it has played a greater role contributing to global aid infrastructure, such as the World Bank Group, and finds its own ways of improving on the effectivity of its own aid.

The Evolution of Chinese Aid

The expansion and evolution of Chinese aid have come from two main factors, one domestic and one international. Most recently, China’s 13th five-year plan, covering the phase of 2016-2020, laid out an increasingly global agenda for China’s development, bringing up core principles such as sustainability, openness and inclusivity. It follows that China’s current agenda for foreign aid will adopt these development principles. Internationally, adoptions of U.N. resolutions such as the Paris Climate Agreements and the G20 Hangzhou summit have carried sustainable and global development goals into its aid agenda, helping China grow as an international leader in global sustainable development.

A Picture of China’s Foreign Aid

The very nature of estimating China’s foreign aid is challenging because the data itself is a state secret. An AidData report, published in late 2017 and meticulously computed and collected by hand over a period of five years, analyzed Chinese aid commitments from 2000-2014 and provides the most recent data. Furthermore, the nature of China’s foreign aid is unlike that of other major global aid donors because it follows its own unique logic. For instance, only as recently as 2018 had China’s foreign aid come under a single centralized body. Furthermore, Chinese aid tends to emphasize economic and infrastructure aid, coming in the form of export credits or near-market rate loans.

As a result of many of these factors, one can truly call little of China’s aid official development assistance (ODA), the most common type of foreign aid in the world today. In fact, one can consider just 22% of China’s aid ODA, while roughly 93% of U.S. aid is ODA. To illustrate the distinction, estimates using looser definitions of ODA have found that China’s quantity of foreign aid has approached that of the United States in some years. Other estimations of ODA in the strict sense find that China’s quantity of aid is comparable with that of countries such as Luxembourg.

Chinese Foreign Aid Around the World

Of China’s complicated foreign aid breakdown, the top three destinations of Chinese foreign aid around the world are Africa in first with 34% of all aid flow, Central and Eastern Europe with 16% and Latin America with 15%. When accounting for only ODA-like aid, however, aid takes on a more nuanced perspective. While Latin America keeps most of its share, now with 12% of ODA-like flows, Central and Eastern Europe receives only 3% of ODA-like flow, and Africa nearly doubles its portions, receiving 58% of China’s ODA-like aid flows.

The Benefits of China’s Foreign Aid

AidData ultimately concluded in its research that Chinese aid, contrary to some people’s fears, certainly did more good than harm. One point AidData made was that Chinese ODA would, on average, contribute to a 0.7% increase in economic growth two years after project commitments, although it did not find positive correlations between non-ODA aid and growth.

China’s evolution from net aid recipient to major global donor has been a transition that has kept pace with its financial development. Despite the shortlisting of available data and information, China is poised to overtake the U.S. as the largest aid donor in Africa if one considers all of the aid it gives. Mystery ultimately shrouds China’s aid, even today, and to know where the next stage of Chinese aid will go, it would be beneficial to follow China’s broader national development agendas which set the broader tone and direction of all economic efforts in the country. Given its expanded role in today’s world, China will likely continue on its overall trend of improving both the quantity and impact of its own foreign aid as it incorporates international development agendas, learning from and teaching others about its own economic lessons.

– Marshall Wu
Photo: Flickr

, , , , , ,

An Ecological Approach to Diminish Poverty in China

Ecological Approach to Diminish Poverty in China
Under the leadership of President Xi Jinping, many successful efforts have occurred in recent years to diminish poverty in China, such as taking an ecological approach. One such effort is the approach of creating jobs for impoverished citizens through the implementation of land protection programs. The Chinese government is treating poverty in China and environmental sustainability issues simultaneously. As the Chinese government designated, impoverished people are those earning approximately $1.10 per day. Comparatively, the International Poverty line, established by the World Bank in 2015, rests at earning $1.90 per day.

This ecological approach to reducing poverty in China resulted in a decline of more than 800 million people, who were previously living below the national poverty threshold, since 1978. In the year 2018, President Xi Jinping and his administration enabled 13.86 million people to rise out of poverty. In 1990, China rose from a 0.502 human development index value to 0.752 in 2017.

Rural Poverty in China

For Chinese citizens living in rural and remote areas, poverty mitigation has become much slower. Currently, 16.6 million rural citizens continue to live in poverty.

President Xi Jinping and his administration are combining the impending issues of rural poverty with another pressing matter, environmental decline. The Chinese government was among the first to incorporate the United Nations’ 17 Sustainable Development Goals (SDGs) in a national action plan. One of the United Nations’ goals is to completely eradicate poverty by 2030.

Grasslands Protection as a Solution for Poverty

A significant part of China’s sustainable development plans is the protection and development of grasslands within the nation. Grasslands comprise 63% of China’s green vegetation but 70% of these areas are moderate to severely degraded. One can attribute the decline of Chinese grasslands to erosion by both wind and water as well as the changing environmental conditions. The uncontrolled grazing of livestock causes additional damage. The deteriorating grasslands largely overlap with impoverished rural communities within the same region of western China.

In Qumalai, a county in China’s western Qinghai province, people are constraining the grazing of cattle and sheep, which constitute the region’s largest industry, as a side effect of grassland protection efforts. In response, the Qinghai Forestry and Grassland Bureau has assisted in creating jobs in the form of grassland guardians for approximately 49,000 registered impoverished people within Qumalai. Each member of this workforce has the potential to earn around $260 per month. A more permanent solution with a larger potential comes in the form of establishing a Chinese herb plantation in Qumalai’s Maduro township.

In 2005, the restoration of grasslands in China’s Inner Mongolia Autonomous Region improved grass coverage to 100%, which enables the survival of animals on lands designated for grazing. For locals in the region, subsequent animal products added the addition of 300 yuan to the average annual income per person. The region is additionally able to replenish the local economy with more than 4 million yuan annually through the harvest of dried hay.

Since 2016, China has been working with its 13th Five-Year Plan to address poverty alleviation and environmental sustainability. Present efforts focus heavily on the impoverished rural fraction of Chinese citizens. Between 2018 and 2020, about $31 billion will go toward remedying poverty in China.

– Bhavya Girotra
Photo: Flickr