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China’s “rogue aid” to Africa isn’t as much or as controversial as we thought

Obsession
China in Africa
Quartz africa
Obsession
China in Africa
Quartz africa

A decade ago, a New York Times columnist coined the term “rogue aid” to describe China’s financial assistance in the developing world: nontransparent, nondemocratic, and above all self-interested. Since then, the label has stuck.

In Africa, Chinese aid has been blamed for propping up authoritarian regimes, building shoddy roads and infrastructure built by imported Chinese workers, and focusing mainly on countries home to oil, minerals, and other resources that China needs.

A new study (pdf) based on the analysis of 4,300 Chinese-funded projects in 140 countries by AidData, a research lab at William & Mary in Virginia, paints a more complicated picture. African countries received the largest proportion, 59%, of projects financed by China between 2000 and 2014. But when it comes to the actual value of projects committed China’s African partners rank fairly low on the list.

Of the 25 largest Chinese-funded projects by value, only six were in Africa, according to the data set. China funds more mega-projects, those worth $1 billion or more, in Southeast Asia, the former Soviet Union, and Latin America than in Africa. In terms of average size of projects, only one African country, South Africa, ranked among the top 20 recipients. Of China’s top recipients of overall official financing, only two African countries made the list.

African countries do receive more Chinese aid in the strictest definition of the term. According to the OECD, official development assistance (ODA) is finance for local economic development that doesn’t profit the donor country. At least 25% of the amount provided must be in the form of a grant. Seven of the top 10 recipients of Chinese ODA between 2000 and 2014 were in Africa.

In these cases, Chinese aid does appear to be effective in boosting local development. AidData’s analysis found that a Chinese aid project results in a 0.7 to 1.1 percentage point increase in economic growth two years after its approval, similar to projects funded by the United States and other Western donors.

The only problem is that China doesn’t give that much aid out. Most of China donated or lent during the time period analyzed, about $350 billion, was in the form of export credits and market, or close-to-market rate loans. Only about a fifth of China’s overall financial contributions around the world can be defined as ODA, compared to the US where most of its overseas financing can be defined as aid.

Chinese officials like to say that China, as a developing country itself, can’t afford to give that much in aid, and that Beijing’ strategy in Africa is to seek “win-win” relationships, where both sides benefit. But it’s not clear that this strategy does result in benefits for everyone. In contrast to Chinese ODA, the study found that China’s more commercially oriented forms of overseas assistance did not boost economic growth in recipient countries.

“If China reoriented more of it overseas spending towards ODA, low- and middle- income countries would potentially be in a position to reap even larger economic growth dividends,” says Brad Parks, AidData’s executive director.

If Chinese aid isn’t particularly rogue, it’s also not very altruistic. Previous research by AidData found that African countries that side with China in United Nations votes saw on average 86% more in Chinese aid.

More broadly, China’s assistance in Africa is changing how aid is given in Africa. Using AidData’s dataset, economist Diego Hernandez found that the World Bank attaches fewer conditions to its loans in African countries that are also receiving funds from China. For every percentage-point increase in Chinese aid, countries received 15% fewer conditions from the World Bank, he concluded in a study earlier this year.

Another researcher, Xiaojun Li, found a similar pattern among African countries receiving both Western and Chinese aid. Using a political freedom index compiled by Freedom House, he concluded in a paper in June that the democratizing effects of Western aid through conditions on governance have diminished as African countries have been able to seek Chinese funding.

“African countries have come to realize that they need options, not conditions, when it comes to aid. China’s aid and development financing provides such options and is thus welcomed with open arms by many African countries,” Li concludes.

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