The Social Effects of Chinese Foreign Aid

Abstract

Nowadays, there is widespread skepticism, misunderstanding, and misinterpretation regarding China’s foreign aid to developing countries, and very few studies have been devoted even to the question of whether China’s aid causes the occurrence of civil conflicts in recipient countries. Existing knowledge, mechanisms, practices, and even values and goals of China’s foreign aid remain incomplete. This paper therefore examines the effects of Chinese foreign aid (broken down into project aid and development loans) on the incidence of civil conflict in Africa between 2000 and 2014. Analyzing the extent to which disaggregated Chinese foreign aid affects the incidence of civil conflict in Africa from 2000 to 2014 using annual country-specific data from AidData, the Uppsala Conflict Data Program, World Bank National Account Data, Atlas Narodov Mira, and Ethnic Power Relations Dataset by conducting probit regression analysis, we found that the categories of development loan aid have explanatory power in reducing the incidence of civil conflict in a recipient country. This study concludes that Chinese foreign aid, especially Development loan aid that flowed to African countries during the study period, has explanatory power for reducing civil conflict. This study therefore seeks to contribute to scholars and policymakers by identifying the effectiveness of specific aid components that serve as key tools for donor countries to manage aid flows.