Chinese development aid to Asia: Size and motives

Abstract

This research note empirically examines China’s development assistance to Asia, a region critical to China’s geostrategic ambition, from 2000 to 2014. It uses AidData’s Global Chinese Official Finance Dataset, one of the most reliable publicly available data sources on Chinese aid, which systematically collects and classifies different types of China’s official development finance. It is found that, despite a recent surge, China’s development assistance to Asia remains highly limited compared to that of Japan, Asia’s top donor, and that the economic sectors of energy, transport, and mining dominate financial flows. Econometric analysis results suggest that China’s aid allocation in Asia is influenced by its export relations, but, more importantly, that foreign policy considerations do not play a significant role, which is in contrast to the findings of recent work on Chinese aid to Africa. The results suggest that better measures may be needed to properly capture China’s strategic interests in Asia, including its involvement in the territorial dispute in the South China Sea.

Did 272 billion dollars from China help stabilize business cycle fluctuations in recipient countries?

“…In Asia, the second largest recipient of Chinese ODA, ODA commitments are acyclical with respect to recipient countries' output fluctuations and fiscal revenue. This result is consistent with Oh (2019) who found evidence that Chinese aid allocation in Asia is influenced by its commercial interests (particularly export relations), but not by recipients' needs. A similar pattern of acyclicality is observed in Europe, while in Oceania, ODA commitments seem to be procyclical.…”

“…According to Dreher et al. (2018) and Oh (2019), China's foreign policy interests guide its ODA allocations. China uses its foreign aid policy to secure its diplomatic ties and influence the voting behavior of recipient governments in international fora (Dreher & Fuchs, 2015).…”

“…The present study contributes to two bodies of literature. First, it contributes to the growing literature on Chinese OF to developing countries: its determinants (Broich, 2017; Dreher & Fuchs, 2015; Dreher et al., 2018, 2019; Guillon & Mathonnat, 2020; Oh, 2019) and its implications for economic growth (Dreher et al., 2020) and welfare (Martorano et al., 2020). This literature has found that the allocation of Chinese ODA is driven primarily by foreign policy considerations, while economic interests better explain the distribution of less concessional OOF.…”

Modeling the Impact of a Model: The (Non)Relationship between China's Economic Rise and African Democracy

“…It is less evident that aid and FDI alone should be log transformed because of the many zero values. This is Oh's (2019) motivation for keeping aid in original form, which I follow here.…”

Manifestations of Chinese Development Aid and Its Hidden Meanings

“…Negative perceptions that occur among others in media refer to commercial purposes behind such aid. Chinese development aid is perceived as a tool of securing Chinese egoistic interests like access to natural resources or providing good opportunities for foreign investments for Chinese companies (Oh, 2019). It might be the case; however, the Chinese government declares different motives for their generous aid.…”