China’s foreign aid is sharply in focus this week with an unprecedented new data trove showing the country’s growing global reach and detailing how Beijing spends its cash.
In recent decades, the world’s second largest economy has evolved from an aid recipient to a net aid donor. But a lack of official information on China’s development activities had prevented the international community from understanding where and how the country spends its foreign aid.
That’s because the government considers its international development finance program to be a “state secret,” according to AidData, a research lab at Virginia-based College of William Mary.
In an effort to pull back the curtain on Chinese aid, AidData unveiled new data this week that tracks China’s official financing, including foreign aid, concessional and non-concessional state financing, between 2000 and 2014.
During that period, Beijing committed $354.3 billion to 140 countries, the group found. In comparison, U.S. official finance stood at $394.6 billion.
A clear majority of U.S. spending was in the form of official development assistance (ODA), “the strict definition of aid,” while the bulk of Chinese spending focused on other official flows (OOF), which is primarily intended for commercial projects, AidData said.
As the mainland catches up to Washington, that could have broad implications for international foreign policy.
“If the U.S. follows through on its rhetoric and scales back its global footprint, China may be well-positioned to step into the breach and cement its role as a preferred donor and lender to the developing world,” Samantha Custer, AidData’s director of policy analysis unit, said in a statement.
Infrastructure dominates the majority of Chinese funds, particularly transportation, the lab discovered.
Many top recipients of official Chinese development aid are members of the Belt and Road Initiative —a high-reaching program that aims to enact land and maritime trading routes across three continents.
From Africa to South America, Chinese investment in the developing world has long carried connotations of political baggage — despite Beijing’s assertions to the contrary.
In a separate analysis of AidData’s results, research group the Brookings Institution found that Chinese lending was uncorrelated with governance. Among the top 20 borrowers from China between 2012 and 2014, 13 ranked poorly on the World Bank’s indicator for rule of law, Brookings revealed in the below map.
“The danger for China is that it is lending lots of money to risky countries, generally on commercial terms,” Brookings said in a recent note.
“In a poor governance environment, projects are less likely to proceed well and to generate growth, creating repayment difficulties.”