The Roles of Aid in Politics Putting China in Perspective



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- Upholding democracy and equality to achieve coordination and cooperation. All countries should, on the basis of the UN Charter and the Five Principles of Peaceful Coexistence, promote democracy in international relations through dialogue, communication and cooperation. The internal affairs of a country should be decided by its people, international affairs should be discussed and solved by all countries on an equal footing, and developing countries ought to enjoy the equal right to participate in and make decisions on international affairs. All countries should respect each other and treat each other equally. No country is entitled to impose its own will upon others, or maintain its security and development at the price of the interests of others. The international community should oppose unilateralism, advocate and promote multilateralism, and make the UN and its Security Council play a more active role in international affairs. When dealing with international relations, it is necessary to persist in proceeding from the common interests of all the people throughout the world, make efforts to expand common interests, enhance understanding through communication, strengthen cooperation through understanding and create a win-win situation through cooperation.

- Upholding harmony and mutual trust to realize common security. All countries should join hands to respond to threats against world security. We should abandon the Cold War mentality, cultivate a new security concept featuring mutual trust, mutual benefit, equality and coordination, build a fair and effective collective security mechanism aimed at jointly preventing conflict and war, and cooperate to eliminate or reduce as much as possible threats from such non-traditional security problems as terrorist activities, financial crises and natural disasters, so as to safeguard world peace, security and stability. We should persist in settling international disputes and conflicts peacefully through consultations and negotiations on the basis of equality, work together to oppose acts of encroachment on the sovereignty of other countries, interference in the internal affairs of other countries, and willful use or threat of use of military force. We should step up cooperation in a resolute fight against terrorism, stamp out both the symptoms and root causes of the problem of terrorism, with special emphasis on eliminating the root cause of the menace. We should achieve effective disarmament and arms control in a fair, rational, comprehensive and balanced fashion, prevent the proliferation of weapons of mass destruction, vigorously promote the international nuclear disarmament process, and maintain global strategic stability.

- Upholding fairness and mutual benefit to achieve common development. In the process of economic globalization, we should stick to the principle of fairness, achieve balanced and orderly development, and benefit all countries, developing countries in particular, instead of further widening of the gap between South and North. We should propel economic globalization towards the direction of common prosperity. The developed countries should shoulder greater responsibility for a universal, coordinated and balanced development of the world, while the developing countries should make full use of their own advantages to achieve development. We should actively further trade and investment liberalization and facilitation, remove all kinds of trade barriers, increase market access, ease restrictions on technology export, so as to establish an international multilateral trading system that is public, fair, rational, transparent, open and nondiscriminatory, and construct a good trading environment conducive to orderly global economic development. We should further improve the international financial system to create a stable and highly efficient financial environment conducive to global economic growth. We should step up worldwide dialogue and cooperation on energy, and jointly maintain energy security and energy market stability. We should actively promote and guarantee human rights to ensure that everyone enjoys equal opportunities and right to pursue overall development. We should make innovations in the mode of development, promote the harmonious development of man and Nature, and take the road of sustainable development.

- Upholding tolerance and opening to achieve dialogue among civilizations. Diversity of civilizations is a basic feature of human society, and an important driving force for the progress of mankind. All countries should respect other country's right to independently choose their own social systems and paths of development, learn from one another and draw on the strong points of others to make up for their own weak points, thus achieving rejuvenation and development in line with their own national conditions. Dialogues and exchanges among civilizations should be encouraged with the aim of doing away with misgivings and estrangement existing between civilizations, and develop together by seeking common ground while putting aside differences, so as to make mankind more harmonious and the world more colorful. We should endeavor to preserve the diversity of civilizations and development patterns, and jointly build a harmonious world where all civilizations coexist and accommodate one another.

Over the years, China has persisted in the policies of peace, development and cooperation, and pursued an independent foreign policy of peace. In the spirit of democracy, harmony, justice and tolerance, China has been playing a constructive role, and making efforts to attain the lofty goal of building a harmonious world together with all other countries.

China is working hard to bring about a just and rational new international political and economic order, and stands for greater democracy in international relations. China adheres to the purpose and principles of the UN Charter, attaches great importance to the UN's role in international affairs as the core of the international multilateral mechanism, vigorously promotes multilateral cooperation to settle regional conflicts and development problems, and actively supports the UN to play a greater role in international affairs. China backs up UN reform, and firmly helps safeguard its long-term interests and the common interests of its members. China has joined more than 130 inter-governmental international organizations, including the International Atomic Energy Agency (IAEA), is committed to 267 international multilateral treaties such as the Treaty on the Non-Proliferation of Nuclear Weapons, and actively participates in international cooperation in such fields as anti-terrorism, arms control, non-proliferation, peacekeeping, economy and trade, development, human rights, law-enforcement, and the environment.

China takes practical steps to establish fraternal relations with surrounding regions and promote cooperation in maintaining regional security. In line with the generally acknowledged principles of international law and in the spirit of consultation on the basis of equality, mutual understanding and mutual accommodation, China has made efforts to properly resolve boundary issues with neighboring countries, settle disputes and promote stability. So far, thanks to joint efforts with various countries, China has signed boundary treaties with 12 continental neighbors, settling boundary issues left over from history. The boundary issues with India and Bhutan are in the process of being settled. China actively promotes dialogue and cooperation on regional security, and plays a positive and constructive role in such regional mechanisms as ASEAN + China, ASEAN + China, Japan and the ROK, Shanghai Cooperation Organization, Asia Pacific Economic Cooperation, ASEAN Regional Forum, and Asian Cooperation Dialogue. China has joined the Treaty of Amity and Cooperation in Southeast Asia, lending new vitality to the peaceful and friendly relationship between China and ASEAN members.

China plays a constructive role in resolving weighty international and regional issues for common security. With respect to the nuclear issue on the Korean Peninsula, China has worked tirelessly with the other relevant parties, and succeeded in convening and hosting first the Three-Party Talks (China, North Korea and the United States) and then the Six-Party Talks (China, North Korea, the United States, the Republic of Korea, Russia and Japan). China was instrumental in getting the participants to issue a joint statement, thus mitigating tension on the peninsula, and contributing constructively to peace and stability in Northeast Asia. Regarding the Middle East issue, China encourages the parties involved to resume talks and start a new peace process based on relevant UN resolutions and the principle of "Land for Peace." As for the Iraq issue, China advocates seeking a political solution within the UN framework, and is making great efforts in this regard. On the Iran nuclear issue, China has tried several approaches to persuade the parties involved to engage in dialogue and find a proper and peaceful settlement within the IAEA framework. Moreover, China is expanding its participation in UN peacekeeping efforts, having sent military personnel, police and civil officers on 14 UN peacekeeping missions, to the number of 3,000.

For many years, China has provided assistance within its capacity to other developing countries to help them build the capacity for self-development as well as engage in common development. So far, China has provided assistance to more than 110 countries and regional organizations for over 2,000 projects. China has reduced or canceled 198 debts totaling 16.6 billion yuan owed to it by 44 developing countries. In May 2005, the International Poverty-Reduction Center in China was formally set up in Beijing. In September 2005, at the High-Level Meeting on Financing for Development, on the occasion of the 60th Anniversary of the United Nations, President Hu Jintao announced the new measures China would adopt to increase assistance to other developing countries: China will give zero tariff treatment for certain products to all the 39 Least-Developed Countries (LDCs) having diplomatic relations with China, covering most commodities exported by these countries to China; further expand aid to Heavily Indebted Poor Countries (HIPCs) and LDCs; through bilateral channels, exempt or cancel in other ways within the next two years of all the outstanding interest-free and low-interest government loans due as of the end of 2004 owed by all the HIPCs having diplomatic relations with China; within the next three years, provide US$10 billion in preferential loans and preferential export buyer's credit to developing countries to help them strengthen the construction of infrastructure, promote enterprises of both sides to carry out joint venture cooperation; within the next three years, increase aid to developing countries, particularly aid to African countries in related areas, provide to them medicines including effective drugs to prevent malaria, help them build and improve medical facilities and train medical personnel; and train 30,000 persons of various professions from the developing countries within the next three years, and help relevant countries expedite the training of talented people.

China continuously enhances exchanges and dialogues with other civilizations to promote mutual tolerance. Opening, tolerance and all-embracing are important features of Chinese civilization. As the trend of economic globalization develops in depth, China, all the more aware of the significance of exchanges and dialogues among different civilizations, is working harder to get the rest of the world to understand China, while absorbing and drawing on the useful fruits of other civilizations. In recent years, China has cooperated with numerous countries in holding Culture Weeks, Culture Tours, Culture Festivals and Culture Years, thus helping promote exchanges and understanding between the Chinese people and other peoples, and creating new forms for equal dialogue between civilizations.

Conclusion

China is the largest developing country in the world. The 1.3 billion Chinese people, taking the road of peaceful development, undoubtedly play a critical and positive role in the lofty pursuit of the peace and development of mankind.

The Chinese government and people are well aware that China is still a developing country facing a lot of difficulties and problems on its road of development, and therefore it still has a long way to go before modernization is achieved. The road of peaceful development accords with the fundamental interests of the Chinese people; it also conforms to the objective requirements of social development and progress of mankind. China is now taking the road of peaceful development, and will continue to do so when it gets stronger in the future. The resolve of the Chinese government and the Chinese people to stick to the road of peaceful development is unshakable.

The Chinese government and people also see clearly that peace and development, the two overriding issues facing the world, have not yet been fundamentally achieved. Local wars and conflicts arising from various causes keep erupting. Problems and conflicts in some regions remain complicated and thorny. Traditional and non-traditional factors threatening security are intertwined. The wealth gap between North and South continues to widen. People in some countries are still being denied the basic right to subsistence, and even survival. All this has made the road leading to a harmonious world characterized by sustained peace and common prosperity a bumpy and challenging one, and reaching the goal demands long and unremitting efforts by the people throughout the world.

The 21st century has opened up bright prospects, and human society is developing at an unprecedented rate. China has identified its goal for the first 20 years of this century. That is, to build a moderately well-off society in an all-round way that benefits over one billion people, further develop China's economy, improve democracy, advance science and education, enrich culture, foster greater social harmony and upgrade the quality of life of the Chinese people. China is certain to make more contributions to the lofty cause of peace and development of mankind.

Kaplinsky, Raphael, McCormick, Dorothy and Morris, Mike (2007), “The Impact of China on Sub-Saharan Africa,” IDS Working Paper 291, Brighton: Institute of Development Studies.



The Challenge: Maximizing Opportunities and Minimizing Threats

Although SSA’s trade with China is relatively small in comparison to its trade with the industrialised countries, it has grown very rapidly, especially since 2001. There is a danger of overestimating the historic and present impact, and underestimating the potential future impact of China on SSA.

1. At a general level, China’s impact on SSA:


  • Involves three primary types of links – trade, production/FDI and aid;

  • Is in some cases complementary to growth and poverty alleviation, in other cases it is competitive;

  • Is both direct (in bilateral links between individual countries and China) and indirect (with the impact being felt in third-country markets);

  • Reflects a mix of strategic, political and economic factors, and involves a range of stakeholders, both within China and in SSA.

Since these varied impacts are unevenly felt within and between countries, it is important to maintain a comprehensive perspective if the opportunities are to be maximised and the threats minimised in such a way as to sustain poverty alleviation and to enhance income distribution.

2. More specifically, with regard to the trade channel:



  • China has predominantly imported a limited number of products – mostly oil and hard commodities – from a limited number of SSA economies. In return, it predominantly exports manufactures, mostly final consumption goods.

  • Most is known about the direct trade links, in which China now has a growing trade surplus with SSA. These direct trade links combine complementary impacts (notably enhancing consumer welfare through cheap goods), and competitive impacts where there is evidence that domestic manufacturers are in some countries being squeezed by China-sourced imports.

  • The indirect trade links, arising through Chinese participation in global markets, are more difficult to assess. In general, it would appear that SSA economies gain from these indirect links, since the price of many of SSA’s imports are falling due to growing Chinese competitiveness, and China’s imports of commodities are pushing up the prices of SSA exports. However, in some sectors, notably clothing and furniture, there is persuasive evidence that China’s growing competitiveness in global markets is having a very harmful impact on poor SSA exporting economies. Lesotho, Swaziland, Madagascar and Kenya have all been badly hit, and there have been particularly damaging impacts on South Africa. Employment loss has been high, with very severe distributional and poverty impacts.

3. With regard to the FDI, production and aid vectors:

  • The Chinese presence in SSA appears to be driven primarily by the strategic search for raw materials rather than for final markets or for low-cost production platforms.

  • Chinese firms work to longer time horizons than Western and Japanese firms, in part because many are state-owned and do not appear to be subject to the same short-term profit-maximising imperatives, and in part because of their access to low-cost capital.

  • There is increasing Chinese participation in the energy and resource sectors, particularly in fragile states such as the Sudan, Angola and the DRC. This is linked to attempts by some fragile states to evade pressures by western donors and NGOs to promote more transparent and better governance.

  • Other realms of activity are in infrastructure development (Chinese firms appear to have costs which are one-quarter to one-half less than Western and South African firms); in small enterprises in some countries (for example Sierra Leone); in trading (for example, Namibia); and in farming (for example, as is emerging in Mozambique).

  • Chinese aid is growing throughout the region, particularly in recent years, and appears to be carefully targeted to complement its commercial activities, including in fragile states.

What We Don’t Know

Whilst these major policy challenges are clear, important key knowledge gaps exist which need to be filled if policy responses are to be appropriately nuanced for individual country circumstances. The major knowledge gaps are with regard to:



  • The need for baseline studies to assess the changing future impact of China on SSA;

  • Analyses of the determinants of SSA competitiveness and the steps required to enhance productivity (for example, in clothing, textiles, footwear and furniture, as well as in export-oriented food crops);

  • A more thorough assessment of indirect impacts of China’s trade on SSA, facilitating the development of appropriate policies for providing special and differential treatment to low income SSA economies in global markets;

  • Determining the impact of China on consumer welfare, income distribution and absolute poverty levels in SSA, through an analysis of the consumer benefits derived from cheaper imports, and the distributional implications of a switch in specialisation away from labour-intensive manufactures to capital intensive commodities;

  • Distinguishing generic from sub-regional and country-specific impacts, aiding the classification of different types of SSA economies;

  • Identifying likely future areas of threat and opportunity;

  • Determining the drivers of China’s strategic engagement with SSA and their impact on transparent and better governance on the continent.

Conclusion

This growing Chinese presence raises six major policy challenges for SSA if the manifold opportunities are to be grasped and the threats minimised:



  1. It poses particular threats to the manufacturing sector. Here the outlook is not entirely bleak, but SSA countries need to take explicit steps to counter act the dangers posed to existing and future capabilities in industry.

  2. Although the commodity boom favours some SSA economies, it poses very severe problems of economic management. Poorly-handled, a resourceboom can easily become a resource-curse. Much can be learned from the experience of other countries (including in SSA) in handling these resourcebooms.

  3. Notwithstanding the welfare gains to the poor from lower import prices, the expansion of capital-intensive mineral production and the decline of labour-intensive manufactures pose severe challenges for poverty-alleviation and income distribution. There is, moreover, the additional problem that resource-production is closely associated with violence, corruption and fragile states. Policies to ameliorate these potential adverse poverty-related impacts need to be addressed.

  4. Linked to this, China has actively forged closer links with fragile states and this has undermined attempts by the global community to enhance transparency and better governance. There is also emerging evidence that attempts to foster better corporate and environmental governance are also being undermined by China’s presence in some SSA countries.

  5. African economies are being pulled in different directions with regard to their linkages with other economies. One pressure is to sustain historical links with the EU and North America, cemented by various preferential trading agreements. Another pressure is to strengthen links with other SSA economies, particularly in southern Africa. A third pressure is to enhance links with Asia in general, and China in particular. Scarce administrative and strategic capabilities may require SSA economies to choose how they respond to these various pulls. There are strong arguments for a concerted ‘look East’ policy.

  6. The key capability which SSA economies require is the development of dynamic capabilities to scan changing environments, to develop appropriate strategic responses and to implement these strategies effectively. Unless these capabilities are built – in government, in the corporate and farming sectors, and in civil society – the opportunities offered by Chinese growth may be overwhelmed by the threats which are raised. This applies particularly to emerging sectors of Chinese demand (for example, imports of food products).

All of this poses severe challenges for a variety of stakeholders:

  • for governments, firms, farms and civil society within SSA;

  • for Chinese stakeholders who may be insufficiently aware of their impact on SSA;

  • for DFID and other bi- and multi-lateral agencies who have much to offer in helping to build appropriate (dynamic) capabilities, and to mediate between different governments and stakeholders.

Kaplinsky, Raphael, McCormick, Dorothy and Morris, Mike (2008), “China and Sub Saharan Africa: Impacts and Challenges of a Growing Relationship,” School of Advanced International Studies Working Papers in African Studies 05-08, Washington, DC: The John Hopkins University.

The detailed analysis presented in this paper has supported the growing realization that China’s present and potential impact on SSA is both far-reaching and complex. The synthetic framework proposed in Section 2 has been helpful in disentangling the impact channels and their various effects, but even this systematic approach has produced only a partial picture of China’s impact on SSA. This is at least partly because of gaps in our knowledge. Some of these gaps result from lack of data, but others arise because the organization of Chinese society means that the channels are intertwined in ways not immediately obvious to outsiders. This appears to be especially true of the production and aid channels, but may also apply to trade. The result is that some potentially important areas of impact may be misunderstood or missed altogether.

China’s public pronouncements convey a desire for a relationship of South-South cooperation, of one developing country helping another (King 2006). Such a two-way relationship can only be fruitful if both parties respect one another and are ready to listen and learn from each other’s experience. The relationship also needs to be underpinned by an understanding of how the actions of one are likely to affect the life of the other. Only then will genuine partnerships be possible.

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