Welcome to this issue of our resources round-up on China and global development. This month we talk about aid, Chinese companies investing overseas, China’s status as a developing country, and whether the Chinese economic model can work for Africa.
The latest resources on Chinese aid
In the past couple of months, several pieces were published on Chinese aid. A study by Naohiro Kitano at the JICA Research Institute provides updated estimates for China’s foreign aid between 2001 and 2018. The figures for 2017/18, which are estimated under the new reporting system introduced by the Organisation for Economic Co-operation and Development’s Development Assistance Committee, indicate higher aid volumes than in previous years – mainly due to the increase in grants and interest-free loans.
Marina Rudyak’s article, ‘The ins and outs of China’s international development agency’, charts the evolution of Chinese foreign aid and maps the tasks ahead for the recently established Chinese Internal Development and Cooperation Agency. This is part of a series of articles on China’s foreign aid system published by the Carnegie-Tsinghua Centre for Global Policy. Development aid is clearly a priority for China, but Rudyak rightly draws attention to some of the lingering questions about the agency's future effectiveness.
Finally, some slightly surprising results from a recent assessment of perceptions of Australian audiences about Chinese foreign aid in the Pacific. The study, which used an experimental approach to evaluate perceptions, found that news about China’s aid prompted Australian citizens to be more in favour of aid – not for Australia’s interest, but rather to help people in the Pacific.
Chinese companies investing overseas
When considering Chinese companies involved in infrastructure, there is often some confusion: are we talking about loans, grants or private investment? And how does this affect the incentives and outcomes of these projects? Wang Yan and Li Danqing do an excellent job of breaking this down in their latest blog, explaining the different investment modalities and a recent trend towards equity financing.
The Academic Network of Latin America and the Caribbean on China’s (Red ALC-China) published a book on ‘China’s FDI in Latin America and the Caribbean’ (PDF), which details extensively China’s investment in 10 Latin American and Caribbean countries. The authors’ efforts are impressive, tracking both macro flows and individual firms. One of the most striking points to me was how some countries in Latin America, such as Colombia and Uruguay, received very little investment from Chinese companies.
China as a developing country
The debate about China’s status at the World Trade Organization is heated, and has prompted broader discussions about China’s developing country status, as we discussed in a recent round-up. Ma Tao at the Chinese Academy of Social Sciences reflects on this question, and sets out the main reasons and key metrics that support China’s classification as a developing country. While the article is clear in stating its own case, it fails to consider and address the points raised by those who argue the opposite.
This blog by Henry Gao and Weihuan Zhou provides a more nuanced take on the matter, claiming that China doesn’t actually gain much from its developing country status at the WTO. Instead, the authors argue, it’s ‘more about identity than benefits’.
Can the Chinese economic model work in Africa?
A new volume on China-Africa and an economic transformation, edited by Arkebe Oqubay and Justin Lin, was recently launched in Addis Ababa, Ethiopia. The book examines Africa’s economic transformation and the role played by China in some core areas including productive investment and industrialisation, international trade, infrastructure development, and financing. I had the chance to preview a few chapters, and I look forward to reading the rest of the book.
This thought-provoking blog by Tom Harper raises the question of whether the ‘Chinese economic model’ can work for African countries.
Personally, I am always sceptical when people talk about a state-led Chinese model (the Beijing Consensus) versus a market-based western model (or Washington Consensus). The comparison seems reflective of the narrative built around China on one side and the US and Europe on the other, rather than in any real differences in these countries’ behaviours. And, as convincingly demonstrated elsewhere, a historical view of development shows that governments of many countries intervened strongly in the economy – effectively behaving in a way that is much more state-led than market-led.
Regardless, the blog’s main contribution is to define the ‘China model’ as the most successful aspect of China’s soft power. Surely this is the feature that has brought so many African countries, tired of the western model’s lack of success, closer to China?