Chinese Aid and Local Ethnic Identification

Abstract

Recent empirical evidence suggests that Chinese development finance may be particularly prone to elite capture and patronage spending. If aid ends up in the pockets of political elites and their ethno-regional networks, this may exacerbate grievances based in horizontal inequalities. Against this background, the present study investigates whether the implementation of Chinese development projects fuels local ethnic identities. A new geo-referenced dataset on the subnational allocation of Chinese development finance projects to Africa over the 2000-2014 period is geographically matched with survey data for 94,954 respondents from 18 African countries. The identification strategy consists in comparing sites where a Chinese project was under implementation at the time of the interview, to sites where a Chinese project will appear subsequently but where implementation had not yet started at the time of the survey. While suggesting substantial country variation, the empirical results indeed suggest that, on average, living near an ongoing Chinese project fuels ethnic identification. I consider two mechanisms possibly underlying this result. First, competition for the inflow of resources that aid constitutes could mobilize ethnic identities across the board. Second, perceptions of ethnically biased aid may fuel ethnic identities in groups perceiving themselves as disadvantaged. Two observations speak in favour of the latter mechanism. First, the estimated effect is not uniform across groups, but driven by people belonging to the out-group. Second, there is no indication of an equivalent pattern when considering development projects of other donors. Replicating the key analysis for World Bank projects as well as for other bilateral donors, the results in fact indicate the reverse, i.e. that living near an ongoing as opposed to a future project comes with weaker ethnic identification.

Chinese aid and crime: Evidence from Africa

“…Studies on the localised effect of Chinese aid in Africa have been diverse, easily exploited for political patronage and elite capture (Dreher, Fuchs, Hodler, et al, 2019), promotes ethnic saliency (Isaksson, 2020a), local corruption (Brazys et al, 2017; Isaksson & Kotsadam, 2018a), spatial inequality (Bluhm et al, 2020) and involvement of trade unions (Isaksson & Kotsadam, 2018b). Despite the high wave of Chinese aid projects in Africa in recent years, very few studies have focused on evaluating such projects' localised impact on crime, especially as various governments' efforts to combat criminal activities have seen a surge.…”

“…China's development finance characteristics make it an attractive source for most developing countries due to its (i) demand‐driven features (Dreher, Fuchs, Hodler, et al, 2019; Dreher, Fuchs, & Langlotz, 2019) and (ii) noninterference in local domestic affairs (Aidoo & Hess, 2015). Chinese aid is often provided depending on recipient governments' demands and is historically discussed at the highest levels of authority for both parties (Dreher, Fuchs, Hodler, et al, 2019; Isaksson, 2020a). Consequently, China does not interfere with how development partners execute their development strategies, which may be seen as enabling partner nations to own their development.…”

“…Critics of China's involvement in Africa argue that Chinese‐funded development projects are vulnerable to political patronage and elite capture (Dreher, Fuchs, Hodler, et al, 2019), make ethnic identities more salient (Isaksson, 2020a) and encourage local corruption (Brazys et al, 2017; Isaksson & Kotsadam, 2018a). Chinese aid projects tend to be grandeur projects that benefit a few (Strange et al, 2013).…”

“…Evidence shows the effectiveness of Chinese aid at the local administrative levels in Africa. Chinese aid activities tend to increase the economic growth of recipient countries (Bluhm et al, 2020), enhance local political attitudes (Bai et al, 2022; Blair & Roessler, 2021), promote education and health (John Cruzatti et al, 2020; Martorano et al, 2020) and others (Brazys et al, 2017; Dreher, Fuchs, Hodler, et al, 2019; Dreher, Fuchs, & Langlotz, 2019; Isaksson, 2020a; Isaksson & Kotsadam, 2018a; Xu & Zhang, 2020). Some of these earlier studies have used a cross‐country analysis approach; however, we add to the strand of literature that examines the localised effectiveness of Chinese aid projects.…”