On July 10, 2014, the Chinese government released a new white paper on China’s foreign aid, the second such document in history. Compared to the first one, published in April 2011, the new white paper focuses less on Beijing’s general aid policies or its historical practices, but more on the specific priorities and implementation of Chinese current foreign assistance. The white paper also offers richer and more concrete examples of Chinese medical, agricultural, infrastructure and capacity-building projects in developing countries, especially in Africa.
According to the statistics, overall, China has increased its foreign aid efforts since 2009. From 2010 to 2012, China’s foreign aid (89.34 billion yuan, approximately $14.9 billion) was equivalent to 35 percent of all foreign aid China had provided in the previous six decades (256.29 billion yuan). This puts China’s annual foreign aid to be approximately $5 billion, which is lower than the estimates in a recent report “Estimating China’s Foreign Aid 2001-2013” by the Japan International Cooperation Agency Research Institute. The composition of China’s aid financing has also undergone major shifts. The shares of the three types of China’s aid financing have changed. For example, concessional loans now make up the majority of China’s aid financing—their share grew from 28.7 to 55.7 percent—while zero-interest loans share shrank from 29.8 to 8.1 percent. The share of grants also decreased, from 41.4 to 36.2 percent.
The most noteworthy point about Africa in China’s foreign aid is the rising percentage of aid received by the continent. In the 2011 white paper, aid to Africa in 2009 made up 45.7 percent of China’s total aid, while, from 2010 to 2012 the share for Africa climbed to 51.8 percent. This 6.1 percentage point increase is the largest among all regions: The aid allocated for Europe increased from 0.3 percent to 1.7 percent while the aid for Oceania rose from 4.0 percent to 4.2 percent. In comparison, the shares for the other two main developing blocs have both dropped: Asia from 32.8 percent to 30.5 percent, and Latin America and the Caribbean from 12.7 percent to 8.4 percent. Given the overall volume of Chinese aid and Africa’s growing share, it is apparent that Chinese aid to Africa has been on the rise. This trend forms a sharp contrast to OECD countries’ decreasing bilateral aid to sub-Saharan Africa, which dropped 7.9 percent in 2012 and another 4 percent in 2013.
The new white paper still fails to provide a clear answer on whether concessional loans constitute Chinese foreign aid despite its categorization as such. There has always been the question on whether the whole loans or part of them are covered by the Chinese government’s foreign aid budget. The new white paper provides one clarification that is unprecedented: The “principals of concessional loans are raised by China Export-Import Bank on the financial market” and “the difference between the concessional interest rates and the benchmark interest rates of the People’s Bank of China is subsidized by the government’s budget.” These statements seem to confirm the existing understanding that only the differences in interests are covered by the government’s budget (and therefore are foreign aid).
The majority of the white paper seeks to elaborate on the poverty alleviation and capacity building in which China is engaged. It details China’s efforts in improving local livelihoods through agricultural development, vocational training, medical capacity building, improved public facilities and disaster relief as well as China’s contribution to the local economic and social development through infrastructure projects, human resources training, trade promotion and environmental protection. It further emphasizes China’s cooperation with regional frameworks including under FOCAC (Forum on China-Africa Cooperation) and with ASEAN (Association of Southeast Asian Nations) through collective consultations and coordination to promote the development of Africa and Southeast Asia.
In each of these sections, aid projects to various African countries illustrate China’s new approach to and focus in Africa. They anchor China’s aspiration to change the traditional perception that China is only in Africa for its natural resources. In fact, after the visits by President Xi Jinping in 2013 and by Premier Li Keqiang earlier this year, Beijing has been striving to craft new action plans and a new narrative about China in Africa. Most strikingly, China has been downplaying the role of natural resources and mining cooperation in Sino-Africa relations, and instead focuses on cooperation on development issues including infrastructure, transportation networks, manufacturing industries, medical services and health care in Africa.
To this end, the white paper painstakingly lists China’s aid projects in Africa, including 14 agricultural technical demonstration centers, 86 economic infrastructure projects, 30 hospitals, 30 malaria centers, as well as 150 schools, and 105 clean energy and water projects as well as training more than 5,000 agricultural technical experts and more than 3,000 medical staff.
The real picture of China’s economic activities in Africa is far from this rosy and altruistic depiction, and it will take years for the past mercantilist approach China preferred to transform. However, China’s new direction and emphasis on capacity building and sustainable development in Africa deserves applause.
It should be pointed out that international and African scrutiny and criticism, to a large extent, has contributed to China’s changing perspective, as Beijing has been increasingly wary about the reputational risks associated with its approach toward Africa. African countries should grasp the opportunity and tailor China’s new interests and aids according to their own needs and make well-calculated demands.
This article originally appeared in Brookings’ Africa in Focus, on July 16, 2014.