The global development landscape is currently in a period of tumult. A number of developing countries that were once aid recipients are now aid donors, and they represent a growing proportion of the total money spent on international development. China is by far the largest emerging competitor in the global aid market, and its unique way of designing and delivering assistance is challenging the traditional policies and practices of Western powers.
More and more money is sloshing around, as well as more players. China now has a robust bilateral aid program, but it’s also helped create alternative sources of multilateral funding for developing countries—namely, the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank.
Beijing is shaking the foundations of international order put in place by Western powers after World War II. Its attitude towards aid transparency norms is a case in point. China has opted out of global reporting systems, such as the International Aid Transparency Initiative (IATI), which were put in place by Western powers to facilitate donor coordination and minimize duplication and waste. Instead, Beijing has chosen to release few details about its rapidly growing international development finance program, making China’s foreign aid program an informational black hole.
AidData, a research lab at the College of William and Mary, has led an effort over the last four years to address this data deficit. Using an open-source data collection and triangulation methodology, we have amassed a large dataset (at china.aiddata.org) that tracks twenty-two separate Chinese government departments and agencies, funding nearly 2,650 development projects in fifty-one African countries worth approximately $94 billion. We started with Africa because the continent receives more than half of China’s international development budget each year.
Based on these data and other sources, our analysis has resulted in some surprising challenges to widely-held assumptions about what China is up to in Africa. There are ten things we’ve learned, with each having implications for anyone trying to understand the motivations of rising powers more broadly, as well as their global reach and impact.
Finding 1: Over the last decade, Western politicians and public intellectuals have popularized several myths about the nature, distribution, and impact of China’s overseas development activities. One popular claim is that China now provides as much, if not more, aid to Africa as the United States, and that much of this aid is funneled to corrupt and authoritarian regimes. Another commonly heard claim is that China is a “rogue donor” with a strong interest in natural resource acquisition and a weak interest in helping improve social or economic outcomes in developing countries. But if one scratches the surface, it becomes clear that most of these claims are based upon anecdotal accounts, ideological and political commitments and research undertaken with non-transparent data sources and methods. Beijing has made the problem worse: by disclosing little reliable information about its overseas development activities, it has fueled suspicions and made it far more difficult to dispel false claims with evidence.
Our research tries to separate aid (in the strict sense of the term) from official financial activities that resemble but do not qualify as aid—in particular, commercially-oriented state financing with higher interest rates and lower grant elements. And by producing more granular data and analysis, we have managed to uncover a number of new insights that all point in the same direction: the Western policy establishment, and especially U.S. national security experts, should step back and take a deep breath. The sky is not falling.
Finding 2: Consider the myth that China provides as much, if not more, aid to Africa than the United States. This claim is usually trotted out by doomsayers who see it as evidence of declining U.S. power and influence. But by combining our database with the OECD’s strict definition of aid (“official development assistance” or “ODA”), we found that China provided approximately $31.5 billion of aid to Africa between 2000 and 2013 (or approximately $2.25 billion per year). By comparison, the United States disbursed nearly three times as much ODA to Africa over the same period : $92.7 billion (or approximately $6.62 billion per year).
Yet there is an element of truth in the popular claim that Chinese funding to Africa rivals that of the U.S. if one uses a broader definition of aid (called “official financing”) that includes financial transfers with no or little grant element, and financial transfers lacking developmental intent, China and the US provide roughly comparable levels of funding to Africa -- $94.3 billion and $107.9 billion, respectively, between 2000 and 2013. The reason is simple: China provides more funding to Africa for commercial purposes than its does for strictly development purposes.
Finding 3: Another popular myth is that Chinese development finance is all about the “hardware of development” (e.g., roads, ports, railways, refineries and electrical grids). Our data confirms that China has focused its efforts in these sectors, but it also shows that Beijing has created a large and diverse portfolio of investments in Africa’s agricultural, educational, and health sectors. China’s broad sectoral footprint actually resembles that of Western donors—except it is markedly less interested in supporting environmental programs.