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The Case for Chinese Foreign Aid

Critics have long accused China of using foreign aid to advance its geopolitical goals, rather than to help the world’s poor. But recent studies suggest that Chinese development assistance is a rare example of aid that systematically and meaningfully benefits recipient countries.

CHICAGO – Since 2000, China has spent $843 billion on bilateral aid. That is around $39.5 billion per year, similar to the amount provided by the United States, the world’s largest donor of foreign aid. Although the two countries’ definitions of foreign aid differ, no one disputes the fact that China – which in the past two decades has financed 13,427 bilateral aid projects in 165 countries – is the biggest new player in this domain. Moreover, recent research is challenging outside observers’ often negative view of the country’s overseas development schemes.

Critics accuse China of using aid to advance geopolitical goals, rather than to help the world’s poor, and they highlight the harm this assistance may cause in recipient countries. Such criticisms are leveled at all foreign aid. But at first glance, China’s variety looks particularly unpromising, even by aid skeptics’ standards.

For starters, the fact that more than 300 Chinese government institutions and state-owned enterprises financed the country’s 13,000-plus projects, with little involvement from private entities, supports suspicions that the Chinese state is using aid as a political tool. And, unlike other large donors, China does not condition its development aid on recipient countries’ institutions or politics. This further increases the concern that Chinese assistance will be misdirected and fail to fulfill foreign aid’s nominal purpose of promoting sustainable economic development in poor countries.

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