China's foreign aid apparatus has long been shrouded in mystery. But this week, a trove of data released by the College of William and Mary's AidData brought a lot of clarity to Beijing's international spending.
The media instantly latched onto the revelation that Russia is the biggest recipient of Chinese foreign aid. Tellingly, the bulk of this aid - $25 billion out of a total of $36.6 – went to an oil pipeline builder called Transneft. Other "favored" countries of China's mammoth overseas aid mechanism include Pakistan, Kazakhstan, Turkmenistan, Angola, Ethiopia, Sri Lanka, Mali, Venezuela, and Laos. CNN reports that, "A large amount of Chinese aid goes to African nations, which make up seven of the top 10 recipients of aid from China by project volume. China has 704 projects in total. Angola and Ethiopia combined received almost $32 billion of Chinese commitments in the period 2000-2014, almost 10% of the total."
This new information challenges the widely-held idea that China is a "bad donor." According to the Economist, "China is one of the world's largest providers of foreign aid. But it has a reputation as a rogue donor: stories abound of shoddy projects, low environmental standards and mistreatment of workers." But in fact, "a doubling of Chinese grant aid is associated with a 0.4-point increase in the rate of GDP growth of the recipients after two years."
Given the relative success of the program, why the secrecy? "The largesse is unpopular domestically. Many Chinese think that their country is too poor to give handouts and the money ought to be spent at home," the Economist expounds. However, China's domestic population reaps significant returns on these deals. According to Evan Ellis, a U.S. Army War College professor and China scholar, development assistance generates significant business for its companies. "The Chinese don't just give loans," he said. "They are almost all tied to using Chinese companies as subcontractors."
But while commentators have demonstrated anxiety that the effectiveness of Chinese aid might damage the impact of Western assistance, results from this study run counter to such notions. When researchers calculated whether aid effectiveness declined in countries that received Western aid, followed by an influx of Chinese cash, they found no decline. To borrow a phrase beloved by Beijing, China's aid apparatus is looking more like a "win-win" scenario than many previously thought.
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