This week’s topic in focus explores China’s approach to foreign aid and whether it is truly beneficial to developing countries. According to researchers, China had extended a comparable amount of official foreign aid to countries as the United States between the period 2000 to 2014. In doing so, China has arguably used its provision of foreign aid to support its own agenda.
It is recognised that China’s involvement has led to concrete economic and social benefits to the countries and regions it has invested in. One example is through China’s investments in Africa where it has developed or invested in several public infrastructures such as roads or communications networks. As a result, researchers have determined that the creation of these infrastructures has led to greater connectivity and will likely reduce inequality whilst contributing to stability within the region.
China’s contrasting approach to foreign aid
Furthermore, China has taken a vastly different approach from other countries in delivering foreign aid. In contrast to other developed countries which impose strict conditions to the provision of their aid, China has adopted a generous “no strings attached” policy. China does not require its aid recipients to make changes to its political system, nor adopt any governance or accountability structure, nor adhere to international standards in the use of its aid. This in itself is attractive to many developing countries which is seeking to protect its autonomy and against foreign interference.
Nevertheless, China is not being wholly altruistic but is arguably doing so for its own pragmatic reasons. This may be gleaned in this article where commentators have correctly pointed out that China provides aid to stimulate its own economy by obtaining exclusive rights for a country’s natural resources whilst ensuring that Chinese companies and its workers retain the sole right to develop infrastructures and industries.
Unsustainable to rely on China’s foreign aid
By draining a country’s natural resources without the transfer of technology and skills to the local workforce, this is likely unsustainable to a country’s economy in the long run. This is because the local workforce will unlikely possess the capabilities to fully reap the economic benefits of any public infrastructures developed. Furthermore, the lack of accountability also increases the risk of corruption and the financial benefits may be unlikely to reach parts of the population who need them, thus increasing the inequality gap within these countries.
Therefore, on balance, China’s provision of foreign aid does not comprehensively solve long-term problems but should be properly viewed quick fixes for developing countries who are looking to boost their economies in the short-term. But if the long-term implications are not recognized, this could be the beginning of a path to greater problems in future.
Questions for further personal evaluation:
- How else have nations used foreign aid to advance its own national interests?
- To what extent do you agree that developed nations have a duty to provide foreign aid to developing countries?
- ‘altruistic’: showing a wish to help or bring advantages to others, even if it results in disadvantage for yourself:
- ‘stimulate’: to encourage something to grow
Here are more related articles for further reading:
Wharton Public Policy: This article considers whether it is beneficial for a nation to invest in providing foreign aid.
“Some might argue that this money might be better spent at home to boost American growth or American jobs. However, one cannot ignore that foreign aid—though it is likely not the most efficient way to boost domestic American growth—offers a mutual benefit to both the donor (the United States) and to the recipients.
When we couple this domestic economic benefit with the promotion of global security and improved quality of life for millions around the world, it’s easy to see that foreign aid is good for America—and for the world.”
The Diplomat: This article considers the realities of foreign aid and the implications it creates.
“In the sixty-plus years aid has been mandated by government – versus relying solely on private donations – we’ve seen small improvements across the globe, from reducing poverty to slowing population growth to curing and preventing diseases. Progress that otherwise would have been absent without an outpouring of foreign support.
However, the impact from aid has not been proportionate to the amount of money donated. Foreign aid’s biggest downside is that no clear, effective system has been put in place to hold aid recipients and their governments accountable for resources illegally taken from public sector coffers – a long-standing, and still very present, trend from Asia to Africa to Latin America/Caribbean to Europe.”