Chinese Foreign Aid

Countries that are part of the Organization of Economic Co-operation and Development (OECD) have been the dominant force in foreign aid to developing countries in Africa. But in recent years, China has emerged as a game changer, reshaping the global aid landscape and becoming Africa’s biggest donor. Here is a breakdown of the Chinese foreign aid package to Africa and what it means to China.

Chinese investment in Africa rocketed from a mere $210 million in 2000 to more than $3 billion in 2011 and has continued to grow. As a matter of fact, Africa is the largest recipient of Chinese foreign aid, accepting 45.7 percent of China’s ¥256.29 billion total foreign aid by the end of 2009.

The aid is divided into eight categories: complete projects, goods and materials, technical cooperation, human resource development cooperation, medical teams sent abroad, emergency humanitarian aid, volunteer programs in foreign countries and debt relief. By the end of 2009, China had sponsored more than 2,000 development projects in African countries.

Unlike OECD countries, China does not officially disclose its aid information on a regular basis. Data about Chinese foreign aid often comes from media reports and governmental documents. Research labs like AidData are scrutinizing streams of sources and have constructed a fairly solid picture of Chinese foreign aid.

According to AidData, between 2000 and 2013, the largest sector of Chinese aid to Africa was transport and storage, summing to $29 billion distributed to 36 countries. South Africa received $5.2 billion and Kenya accepted $4.8 billion. Sudan, Mozambique and Angola received $3 billion, $2.6 billion and $2.5 billion worth of aid in this sector, respectively.

The second-largest sector was energy generation and supply. Among the $25 billion aid package, Sudan got the largest amount of aid at $4.6 billion. Ethiopia received $3.9 billion and Nigeria, Zambia and Angola each received about $2 billion.

Other multisector and unallocated/unspecified sectors were the third and fourth largest sectors in Chinese aid to Africa. The former sector comprised $20 billion worth of aid and the latter $8.7 billion. Due to China’s non-disclosure policy, the specific items that these budgets financed are difficult to pinpoint. What is worth noting is that Angola received $4.1 billion, the second-most amount of aid in the other multisector category, making Angola the largest recipient in the top three categories.

A total of $6.9 billion was devoted to projects in the communications sector. Nigeria, Ethiopia and Tanzania were the top three recipients, receiving $1.7 billion, $1.2 billion and $676 million respectively.

Chinese foreign aid projects in Africa focus on infrastructure, with transportation, energy and communication dominating almost half of the total aid package. China is also very careful in selecting recipient countries for its aid. Most of the African countries that are endowed with generous aid are very rich in terms of natural resources.

For example, Angola, being the top recipient of more than $12 billion over the thirteen-year span, has important reserves of oil, gas and minerals. Chinese aid to Angola focuses on infrastructure development that will make the export of this wealth accessible. Other leading recipient countries like Ethiopia, Nigeria and Sudan are also rich in natural resources.

Currently, Angola is one of the largest trading partners of China. The Chinese foreign aid agenda seems to indicate an intention to establish trade with the recipient countries, which is an understandably important reason for giving out foreign aid by any country in the world.

One issue that has been hotly debated over the past several years is that, as a non-OECD member, China constantly blurs the line between development finance and foreign aid. Chinese aid does not follow the definition of official development aid set by the OECD. As a result, many of China’s activities are deemed “evil” as they demonstrate a quest for the return of natural resources or trade partnership.

Nevertheless, trading opportunity is a fundamental benefit of foreign assistance that every aid donor is concerned with. In addition, according to Brookings Institution, in reality, China’s investment in and trade with Africa only accounts for a “tiny percentage”–less than five percent–of its global investment and trade. This disproportional aid-to-trade ratio proves China’s foreign aid to Africa agenda is not so selfish.

– Chaorong Wang

Photo: Pixabay