Apples and Dragon Fruits: The Determinants of Aid and Other Forms of State Financing from China to Africa
University of Heidelberg Department of Economics Discussion Paper Series No. 620
58 Pages Posted: 21 Oct 2016
Date Written: October 2016
Chinese “aid” is a lightning rod for criticism. Policymakers, journalists, and public intellectuals claim that Beijing is using its largesse to cement alliances with political leaders, secure access to natural resources, and create exclusive commercial opportunities for Chinese firms — all at the expense of citizens living in developing countries. We argue that much of the controversy about Chinese “aid” stems from a failure to distinguish between China’s Official Development Assistance (ODA) and more commercially-oriented sources and types of state financing. Using a new database on China’s official financing commitments to Africa from 2000-2013, we find the allocation of Chinese ODA to be driven primarily by foreign policy considerations, while economic interests better explain the distribution of less concessional flows. These results highlight the need for better measures of an increasingly diverse set of non-Western financial activities.
Keywords: Development Finance, Foreign Aid, Non-DAC Donors, China, Tracking Underreported Financial Flows
JEL Classification: F35, O19, O21
Suggested Citation: Suggested Citation