China treats its foreign aid like a state secret. New research aims to reveal it.
Since the turn of the century, China has become an unavoidable global provider of foreign assistance, funding everything from opera houses in Algeria to tobacco farms in Zimbabwe.
Try to find in-depth data about these projects, however, and you are mostly out of luck. China treats its foreign assistance budget like a state secret, refusing to work with international bodies that try to coordinate and quantify foreign development funding. In part due to this paucity of information, a reputation has spread among Western critics that China is a “rogue donor” — one that lavishes illiberal regimes with cash to plunder raw materials for its own growth.
An ambitious new research project released this week challenges that assumption by producing the first-ever global data set on Chinese overseas development spending between 2000 and 2014. Brad Parks, the executive director of AidData, a research lab at the College of William & Mary, said it took five years for a team of nearly 100 scholars and research assistants from all over the world to piece together data from 15,000 distinct information sources covering 4,300 projects in 140 different countries and territories.
“What we're about to release is the most comprehensive and detailed source of project information about China's global development footprint ever,” Parks said. The end result is so unique, he said, that they've even had some inquiries from Chinese officials about using it.
AidData's research offers a picture of a rising financial giant that is challenging even the biggest donor nations. China provided $354.4 billion in official funding around the world between 2000 and 2014 — not far off the amount spent by the United States in the same period, $394.6 billion. In some counties, the two nations looked like competitors, with China sometimes usurping the United States to become the preeminent donor.
The research also turns some widespread assumptions about Chinese foreign assistance on their heads. In a previously released project, AidData was able to show when you look at Chinese aid that matches the strict, internationally agreed-upon definition — official development assistance, also known as ODA — it does not appear to be motivated by acquiring natural resources or propping up Beijing-friendly authoritarians.
“China is well known for funding a number of governments with poor governance such as Venezuela, Angola, Iran, and Pakistan,” said David Dollar, a senior fellow at the Brookings Institution who was the U.S. Treasury's economic and financial emissary to China between 2009 and 2013. "[However,] these are balanced by large amounts of lending to countries with relatively good governance: Brazil, India, Indonesia, and the East African states. China’s lending seems to be indifferent to governance.”
The data set suggests Chinese aid is instead generally motivated by two interests: the need level of the recipient country and the broader foreign policy aims of China. AidData found African countries that vote with China at the United Nations get an average bump of 86 percent in aid from Beijing.
“The criteria for China to provide foreign aid is not the nature of the government, but the convergence of interests,” said Yun Sun, an expert on Chinese funding who is with the Stimson Center in Washington. “That need could be political, commercial, or even reputational.”
AidData's research also shows the lions share's of China's global development spending is not official aid but rather distributed via “other official flows,” or OOF. This bracket of funding includes huge deals, like the enormous loans given to Russian oil companies in 2009, in which the motivation is clearly commercial.
“ODA and OOF really need to be considered separately,” Park said. “If the country is rich in natural resources, if it trades a lot with China and if it is credit worthy, it tends to get a lot of OOF.” China's widespread funding of more commercially minded projects is what sets it apart from Western donors, who have largely moved away from loans toward grants. “China is operating to its own rules,” Park said.
AidData's research has shown when Chinese funding is similar to ODA, it boosts economic growth in recipient countries just like Western aid. If a country is on the receiving end of such a Chinese aid project, it will see 0.4 percent average growth two years after the project is committed — a similar rate of growth to aid from the United States and the Organization for Economic Cooperation and Development's (OECD) Development Assistance Committee (and notably higher than aid from the World Bank).
“If you just read a random sampling of media reports about Chinese development project, you will hear about individual projects where the project was reportedly a white elephant project,” Parks said. When it comes to ODA at least, “we just don't really see any evidence. it doesn't seem to be systematically true.”
As China enters the fourth year of its ambitious international infrastructure project, widely known as “One Belt, One Road,” understanding how it spends its money abroad will probably prove more and more important. Whether China will offer a more opaque view of its foreign assistance in the future remains unclear — experts say Beijing remains skeptical of transparency, at least in part due to a tradition of secrecy.
Austin Strange, a PhD candidate at Harvard University who worked with AidData, said numerous Chinese officials have been briefed on the project over the past five years, and at least some have professed an interest in getting better “fine-grained data” to inform their own work.
More on WorldViews
The U.S. foreign aid budget, visualized