The Roles of Aid in Politics Putting China in Perspective



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Lancaster, Carol (2007b), The Chinese Aid System, Washington, DC: Center for Global Development, (http://www.cgdev.org/content/publications/detail/13953/).

Changes Afoot in Chinese Aid

Chinese officials involved in aid give the impression that they are overwhelmed with the increasing engagement of their government in aid-giving and the rapidly expanding workload. (I was told there are only 70 professionals in MOFCOM dealing with Chinese aid at this point.) I can understand why.

In my conversations over the past several years, Chinese officials have also given the impression that they were trying to decide how to shape their aid program and to what extent they wanted to engage with Western aid donors. They clearly do not want to be identified as just one more member of the rich countries’ aid clubs. For political reasons they want to project their own distinctive image in Asia, Africa and Latin America—one of South-South cooperation, of a special understanding and sympathy that comes from sharing problems of poverty; one of having emerged rapidly (but not yet completely) from those problems; and one that will provide them with a separate and privileged relationship with the governments they are helping and cultivating.

And, as noted above, there are the tensions within the Chinese government that are evident in Washington, Paris and Tokyo as well about who controls the aid program and for what purposes.

Not surprisingly then, the Chinese government has begun a process of reconsidering how it should organize and manage its aid. I understand that creating a separate, dedicated aid agency is one of the options under study. I understand also that the Institute for European Studies of the Chinese Academy of Social Science (and perhaps other elements of the government, as well as think tanks and universities) have been asked to do a report on how the Chinese should reform their aid in time for the 17th Communist Party Congress in the fall of 2007 or for the new government to be installed in 2008. It may be that reforms in the organization of Chinese aid will be announced at that time or that this stirring may be only the beginning of a longer process of rethinking on the part of the government about how it runs its aid programs. In Beijing, as elsewhere, many vested interests are involved in the existing aid system which is one reason why such systems throughout the world have usually proven hard to change in fundamental ways.

The Chinese government has also begun to engage directly with foreign aid agencies to learn from their arrangements and processes and tentatively, to collaborate with them. They have sent teams to visit London and Stockholm to learn how these governments manage their aid. The have developed a considerable dialogue with the British Department for International Development on international aid and development issues. They have begun to collaborate with the Canadian government on technical assistance activities in developing countries. They have signed a memorandum of understanding with the International Finance Corporation about collaboration on environmentally sustainable projects in emerging markets. And they have joined or expressed interest in joining donor coordination groups in a number of African countries. (I understand, however, that there has been little substantive contact between Chinese aid officials and U.S. aid officials. If true, that may reflect the sensitivities in Beijing, as well as in Washington, of China’s engaging with the U.S. government; it may also reflect the fact that the United States has not been an aid donor to China and so, does not have an aid presence in Beijing, and so, may lack the understanding of the Chinese government’s aid system and the relationships with key government officials that a presence over time can bring—all of which are essential in the Chinese context for real communication and cooperation.)

China is the most dynamic country in the world with growth and change occurring at an absolutely dizzying pace. The excitement and stresses of rapid change are palpable in Beijing, in Shanghai, in “small” cities like Kunming (population: only 5 million). They are also increasingly evident in China’s aid program, the structure and management of which we are just beginning to get a picture. The challenge for the aid-giving governments of Europe, North American and Japan is to expand lines of communication and, to the extent possible, collaboration with the Chinese who are clearly set to play a major role in aid-giving worldwide.

Li, Anshan (2007), “China and Africa: Policy and Challenges,” in China Security, Vol. 3. No. 3, pp. 69-93.

Manning, Richard (2006), “Will ‘Emerging Donors’ Change the Face of International Co-Operation?,” in Development Policy Review, Vol. 24, No. 4, pp. 371-385.

So let us finally return to the question at the outset of this article: will the emergence of new donors change the landscape of the international development effort and will it undercut some of the important approaches put in place over the years to improve the quality of aid? I hope I have shown that the term ‘new’ or ‘emerging’ donors may be convenient shorthand, but that (as with that other shorthand term ‘fragile states’) shorthand is of limited use. We should recognise that most donors outside the DAC have a history as donors and many of them have a good deal of experience. We should pay attention not just to their aid policies in the narrow sense but to the overall impact that they have on poor countries. I hope that I have shown that the view that we are approaching a radical decline in the DAC share of aid is likely to be mistaken, while at the same time recognising that, in a world of rising aid, developing countries will have the benefit of more choices. And I hope that I have also shown that there are in practice standards of donor behaviour among DAC members and the multilaterals which can and should be maintained. At the same time, I have recognised that in at least three respects there are grounds for concern about the – otherwise welcome – prospect of additional aid flows from beyond the DAC, and emphasised the importance of better dialogue among all providers of international co-operation.

The increases in aid from both the DAC and other donors will make it all the more important for developing countries to manage their total use of donor resources effectively. They will find this easier to achieve the more all donors accept sustainable development and reduction of poverty, as measured by the Millennium Development Goals, as central objectives not only of development aid, but also of their wider policies that impact on poor developing countries. In that way, we could see a new development community that is not just more multipolar but also a real multiplier.

McCormick, Dorothy (2008), “China & India as Africa’s New Donors: The Impact of Aid on Development,” in Review of African Political Economy, Vol. 35, No. 115, pp. 73-92.

This paper’s analysis shows clearly that the potential impact of Chinese and Indian aid on Africa is significant. Both China and India have stated Africa policies, which they are now beginning to actualise. Both countries stand to benefit from increasing involvement with Africa, not only economically, but also politically in terms of their aspirations to be regional and eventually global leaders. Both are able to become donors, though China will probably achieve this more quickly than India. China has the economic strength to provide grants as well as concessional loans, trade preferences, and technical assistance. India is economically weaker, but in certain areas such as ICT is in a position to offer increased technical assistance that Africa sorely needs.

The actual impact of these emerging donors will, however, depend on a variety of internal and external factors that we tried to capture in our model. The example used in this paper – the impact of aid on the manufacturing sector – shows how complex the interactions among these factors can be. Aid can affect manufacturing both directly and indirectly, and through manufacturing it can influence growth, distribution, governance, and the environment. Aid in the form of direct investment in plant and equipment is more likely to come from China than from India, because of the nature of the industrial sector in the two countries. In the case of China, aid and FDI are intertwined, making it difficult to disentangle the two. Possible indirect impacts of aid on manufacturing are many. In fact, the most important is probably the support that China gives for infrastructure development. Of the other indirect forms of assistance to manufacturing, the most common are the academic and technical training offered by both China and India, and the tariff exemptions that China is now experimenting with. Neither the benefits nor the negative impacts are automatic, however, as we have seen from some of the specific examples. They depend on the size, structure, and location of the manufacturing sector in each country, as well as on the policy environment within which the sector operates.

These complexities underscore the need for detailed empirical research. Empirical research on the impact of aid is much less advanced than research on the impacts of Chinese and Indian trade and FDI. There is need for studies in different places using different methodologies that will capture the variables and relationships identified here as well as others that may have been missed. A starting point is a set of broad research questions that can be further refined for specific countries and sectors. At least seven such questions can be identified.


  1. To what extent does aid from China or India that flows directly into manufacturing plant and equipment in sub-Saharan Africa allow it to produce more and/or higher quality goods?

  2. To what extent does aid from China or India aimed at improving physical infrastructure result in better manufacturing performance?

  3. To what extent does aid in the form of access to Chinese or Indian technical or academic training programmes result in better manufacturing performance?

  4. To what extent do tariff exemptions by China and India promote investment in manufacturing?

  5. To what extent does Chinese or Indian aid to other sectors of the economy result in increased demand for locally manufactured products?

  6. To what extent has debt relief by China or India resulted in investments that have had positive spill-over effects on manufacturing?

  7. To what extent has Chinese or Indian aid enabled African governments to pursue their own industrial development policies and programmes?

Each of these broad questions gives rise to a number of subsidiary questions aimed at establishing the basic facts around the question, examining direct and indirect relationships and their effects on growth, distribution, governance, and/or the environment, as well as establishing the links to policy outcomes. Ideally studies would involve collection of data in China and India as well as Africa, and would be designed as collaborative efforts between African and Asian researchers or research institutions. Finally, it goes without saying that China and India are changing rapidly. This means that studies must be designed to capture the dynamics of change as well as the situation at any one point in time.

Ministry of Foreign Affairs of the People’s Republic of China (2006), China’s African Policy, Beijing: Ministry of Foreign Affairs of the People’s Republic of China, retrieved on 23rd August 2010 from www.fmprc.gov.cn/eng/zxxx/t230615.htm#.



Foreword

The first few years of the new century witness a continuation of complex and profound changes in the international situation and further advance of globalization. Peace and development remain the main themes of our times. Safeguarding peace, promoting development and enhancing cooperation, which is the common desire of all peoples, represents the irresistible historical trend. On the other hand, destabilizing factors and uncertainties in the international situation are on the rise. Security issues of various kinds are interwoven. Peace remains evasive and development more pressing.

China, the largest developing country in the world, follows the path of peaceful development and pursues an independent foreign policy of peace. China stands ready to develop friendly relations and cooperation with all countries on the basis of the Five Principles of Peaceful Coexistence so as to contribute to peace, stability and common prosperity around the world.

The African continent, which encompasses the largest number of developing countries, is an important force for world peace and development. China-Africa traditional friendly relations face fresh opportunities under the new circumstances. By this African Policy Paper, the Chinese Government wishes to present to the world the objectives of China's policy towards Africa and the measures to achieve them, and its proposals for cooperation in various fields in the coming years, with a view to promoting the steady growth of China-Africa relations in the long term and bringing the mutually-beneficial cooperation to a new stage. […]



China’s Relations with Africa

China-Africa friendship is embedded in the long history of interchange. Sharing similar historical experience, China and Africa have all along sympathized with and supported each other in the struggle for national liberation and forged a profound friendship.

The founding of the People's Republic of China and the independence of African countries ushered in a new era in China-Africa relations. For over half a century, the two sides have enjoyed close political ties and frequent exchange of high-level visits and people-to-people contacts. Our bilateral trade and economic cooperation have grown rapidly; cooperation in other fields has yielded good results; and consultation and coordination in international affairs have been intensified. China has provided assistance to the best of its ability to African countries, while African countries have also rendered strong support to China on many occasions.

Sincerity, equality and mutual benefit, solidarity and common development-these are the principles guiding China-Africa exchange and cooperation and the driving force to lasting China-Africa relations. […]



China’s African Policy

Enhancing solidarity and cooperation with African countries has always been an important component of China's independent foreign policy of peace. China will unswervingly carry forward the tradition of China-Africa friendship, and, proceeding from the fundamental interests of both the Chinese and African peoples, establish and develop a new type of strategic partnership with Africa, featuring political equality and mutual trust, economic win-win cooperation and cultural exchange. The general principles and objectives of China's African policy are as follows:

- Sincerity, friendship and equality. China adheres to the Five Principles of Peaceful Coexistence, respects African countries’ independent choice of the road of development and supports African countries' efforts to grow stronger through unity.

- Mutual benefit, reciprocity and common prosperity. China supports African countries’ endeavor for economic development and nation building, carries out cooperation in various forms in the economic and social development, and promotes common prosperity of China and Africa.

- Mutual support and close coordination. China will strengthen cooperation with Africa in the UN and other multilateral systems by supporting each other’s just demand and reasonable propositions and continue to appeal to the international community to give more attention to questions concerning peace and development in Africa.

- Learning from each other and seeking common development. China and Africa will learn from and draw upon each other's experience in governance and development, strengthen exchange and cooperation in education, science, culture and health. Supporting African countries' efforts to enhance capacity building, China will work together with Africa in the exploration of the road of sustainable development.

The one China principle is the political foundation for the establishment and development of China’s relations with African countries and regional organizations. The Chinese Government appreciates the fact that the overwhelming majority of African countries abide by the one China principle, refuse to have official relations and contacts with Taiwan and support China’s great cause of reunification. China stands ready to establish and develop state-to-state relations with countries that have not yet established diplomatic ties with China on the basis of the one China principle.

Enhancing All-Round Cooperation Between China and Africa


  1. The Political Field

    1. High-level visits […]

    2. Exchanges between legislative bodies […]

    3. Exchanges between political parties […]

    4. Consultation mechanisms […]

    5. Cooperation in international affairs […]

    6. Exchanges between local governments […]

  2. The Economic Field

    1. Trade […]

    2. Investment […]

    3. Financial cooperation […]

    4. Agricultural cooperation […]

    5. Infrastructure […]

    6. Resources cooperation […]

    7. Tourism cooperation […]

    8. Debt reduction and relief […]

    9. Economic assistance […]

    10. Multilateral cooperation […]

  3. Education, science, culture, health and social aspects

    1. Cooperation in human resources development and education […]

    2. Science and technology cooperation […]

    3. Cultural exchanges […]

    4. Medical and health cooperation […]

    5. Media cooperation […]

    6. Administrative cooperation […]

    7. Consular cooperation […]

    8. People-to-people exchange […]

    9. Environmental cooperation […]

    10. Disaster reduction, relief and humanitarian assistance […]

  4. Peace and Security

    1. Military cooperation […]

    2. Conflict settlement and peacekeeping operations […]

    3. Judicial and police cooperation […]

    4. Non-traditional security areas […]

Forum on China-Africa Cooperation and Its Follow-up Actions

Launched in 2000, the Forum on China-Africa Cooperation has become an effective mechanism for the collective dialogue and multilateral cooperation between China and Africa and put in place an important framework and platform for a new type of China-Africa partnership featuring long-term stability, equality and mutual benefit.

China attaches importance to the positive role of the Forum on China-Africa Cooperation in strengthening political consultation and pragmatic cooperation between China and Africa, and stands ready to work with African countries to conscientiously implement the Beijing Declaration of the Forum on China-Africa Cooperation, the Program for China-Africa Cooperation in Economic and Social Development and the Forum on China-Africa Cooperation-Addis Ababa Action Plan (2004-2006) and its follow-up action plans. China will work with African countries within the framework of the Forum to explore new ways to enhance mutual political trust, promote the comprehensive development of pragmatic cooperation, further improve the mechanism of the forum, and try to find the best way for furthering cooperation between the Forum and the NEPAD.

China’s Relations with African Regional Organizations

China appreciates the significant role of the AU in safeguarding peace and stability in the region and promoting African solidarity and development. China values its friendly cooperation with the AU in all fields, supports its positive role in regional and international affairs and stands ready to provide the AU assistance to the best of its capacity.

China appreciates and supports the positive role of Africa's sub-regional organizations in promoting political stability, economic development and integration in their own regions and stands ready to enhance its amicable cooperation with those organizations.

Mohan, Giles and Power, Marcus (2008), “New African Choice? The Politics of Chinese Engagement,” in Review of African Political Economy, Vol. 35, No. 115, pp. 23-42.

To conclude we want to open up a series of broader issues around the longer term implications of whether China’s involvement will enhance development prospects and political accountability in Africa or undermine them. We do this through a series of research questions for the future and a skeletal methodology. All agree that China is in Africa to stay and so monitoring the unfolding of these relationships is an obvious conclusion from this review. One medium to long term issue which conditions any foreign policy initiatives by China is its domestic inequality. Given huge and growing urban-rural inequality, debate is emerging around whether China can continue to fund aid and investment at current levels, when pressures are coming for domestic redistribution rather than international aid (Naidu, 2007).

We suggested that China’s involvement will not fundamentally alter Africa’s place in the global division of labour. It simply adds a new and significant market without challenging the continent’s extraversion. History suggests that in some states this will entrench rentier states, concentrate ownership in a few hands, and deliver limited multipliers to marginalised Africans. The more upbeat take amongst policymakers (Wild and Mepham, 2006, Tjonneland et al. 2006) is that if Africans can ‘control’ the benefits of Chinese involvement then Africa will benefit. This requires strengthening civil society (Obiorah, 2007) and opening up development to democratic debate to see how redistribution might work. International donors, then, will not do things much differently and encourage the types of governance reforms already in place while ensuring ‘dialogues’ with the Chinese. However, civil society strengthening has been limited thus far and so it remains to be seen whether more of the same actually works.

A related debate, with historical parallels, is whether China will be forced to get more involved in multilateral governance as well as building governance capacity at the national level. So far China has, as we have seen, taken the view publicly that internal political matters are not its concern. This echoes earlier merchants and imperialists, who insisted their interests were largely commercial, but who ended up becoming more and more mired in internal institutional building and policing. Thus, as China’s Africa strategy comes to rely on a growing number of bureaucratic principles and corporate agents, contradictions will increase. Beijing is relying on an increasingly complex set of government oversight agencies to accomplish its Africa policy which are ever harder to manage, because these agencies do not enjoy direct lines of authority over Chinese corporations overseas:

As it deepens, the Chinese government will more likely find itself hamstrung by … an increasing set of tensions and contradictions between the interests and aims of government principals – the bureaucracies based in Beijing tasked with advancing China’s overall national interests – and the aims and interests of ostensible agents – the companies and businesspersons operating on the ground in Africa (Gill and Reilly, 2007:38).

And as these relationships grow and the institutional tendrils become more enmeshed we see possible problems of African people, in western fears, being locked into China for many years to come but equally the Chinese are ‘locked’ into Africa, which brings its own risks.

Leading on from this is that China seeks, as do all investors, a stable and secure investment environment. In line with other superpowers China supplies arms and military training in an attempt to secure resource access. So a possible scenario involves greater superpower conflict in which as a result of arms sales, rent seeking, and growing inequality African states are destabilised even more and pull farther apart. The result in terms of securing access to resources may be that China, and others, end up dealing with a myriad of ‘non-state’ institutional players such as warlords, guerillas, and secessionist movements, not unlike the situation in the contemporary Niger Delta.

In all these areas, though, there is a need for rigorous research and we finish with some key research questions and a methodology. On issues of economic change and class composition we feel there are questions around ownership, wealth distribution, race and organised politics:



  • In what ways do the patterns of Chinese trade, aid and investment reinforce existing macro-economic reforms or does it work against them?

  • How has Chinese ‘aid’ and investment transformed the ownership of businesses in African countries?

  • How does Chinese involvement affect the well being and security of different class groups in Africa? How do different classes of Africans perceive China’s growing role in trade and investment?

  • What is the racial composition of these changing class groupings?

  • Does the changing class and gender composition have implications for organised civil society based politics (e.g. Trade unions, business lobbies)?

Leading from the last question is formal political society and the ways in which political parties and incumbent regimes use China’s presence:

  • How do African politicians and political parties play ‘the China card’?

  • To what extent does China’s involvement strengthen the hold of regimes in power? How do African regimes use Chinese aid and China’s development path as a means to push through different kinds of political change?

Finally, Chinese aid, in all its complexity, and the relations between donors is likely to have long-term repercussions across Africa:

  • In what ways does China deliver aid and how it is different and distanced from ‘western’ aid? How are different discourses of sovereignty, cooperation and development mobilised in these practices?

  • How are Chinese aid and investment projects decided upon and allocated?

  • What forms of conditionality exist in Chinese aid? What effects does this have on policy autonomy in Africa?

  • What tensions exist on the ground over donor coordination? Are western donors at the country level seeking to include China more and in other ways?

These questions urge a detailed empirical response. There are already too many generalised analyses of China and ‘Africa’ ‘as if there were relationships between two countries instead of between one and fifty-three’ (Chan, 2007:2). Instead what are needed are detailed case studies of China-Africa relations, which establish baseline conditions and that are capable of differentiating generic impacts from country specific ones. In the past year we have seen more case studies emerging including Angola, Sudan, Namibia, Tanzania, Zimbabwe and Benin (in le Pere, 2007 and Manji and Marks, 2007), but these are mostly descriptive and use poor quality public data and newspaper accounts. It is vital for critically engaged scholars, activists and policy makers to properly analyse these unfolding relationships in order to guide action rather than continually rely on half truths and impressions.

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