The domestic controversy over China’s foreign aid and the implications for Africa

By Yun Sun
in Program

During his visit to the United Nations just last month, Chinese President Xi Jinping made major pledges in foreign aid. This included $2 billion to the new South-South Cooperation Assistance Fund, debt forgiveness for least-developed countries, and $100 million in military assistance to the African Union, as well as a 10-year, $1 billion“peace and development” fund to support the United Nations.

Africa will foreseeably benefit greatly from the new packages: The continent has traditionally been a priority partner in China’s South-South cooperation plan; the debt forgiveness will potentially cover some least-developed African countries; and the military assistance will support the development of the African Standby Force and the African Crisis Response Force. Similarly, China’s contribution to the U.N. peacekeeping standby force, the committed deployment of a Chinese helicopter unit in Africa, and the funding to U.N. peacekeeping through the “peace and development” fund will have real impact in Africa for peacebuilding and conflict resolution.

China’s pledges draw different reactions at home and abroad

China’s generous gesture is said to have “surprised” the U.N. and has been welcomed by developing countries and the development community. Such positivity is in sharp contrast to the widespread harsh criticisms within Chinese society over the new aid commitment. Chinese netizens and general public openly question and challenge the legitimacy and soundness of these major foreign aid pledges. The People’s Daily even stated that “some people have different views about China’s decision to forgive foreign debts.” The unexpected negativity could potentially have key implications for China’s foreign aid work in Africa.

Most of the criticism over Xi’s pledges originates from the question of whether China, as a developing country itself, should provide such large foreign aid packages. In the view of its critics, China still has a large population living in poverty (more than 82 million in 2014); therefore, the Chinese government should prioritize the welfare of its own people, rather than forgiving debts and providing aid to foreigners. Within the context of the assertive foreign policy Xi has been pursuing since 2013, some question whether the pendulum of China’s foreign aid is swinging back to the leftist extreme model of the 1960s. During the Cultural Revolution, China provided large amounts of foreign aid to developing countries out of ideological and political aspirations, despite its own domestic economic difficulties.

China’s propaganda machine has launched ferocious campaigns to defend Beijing’s foreign aid practice, citing political and economic benefits associated with Chinese aid. These include China’s international image, good relations with recipient countries, and opportunities for Chinese exports. The famous government mouthpiece theGlobal Times further argued that although China benefits greatly from its foreign aid, those “benefits” cannot be discussed or promoted openly due to “serious counter-effects.”

Chinese intentions and its foreign aid

China’s foreign aid to developing countries, including those in Africa, is indeed un-altruistic. As a permanent member of the U.N. Security Council and a world power, China understands that it cannot miss out on the foreign aid scheme: Bilaterally, China has traditionally seen aid as a policy instrument to cement political friendships and facilitate China’s political agenda at multilateral forums. Xi himself has emphasized that China needs to focus on the political and strategic benefits rather than the narrow, immediate economic calculations. Economically, the “tied aid” that combines Chinese foreign aid, investment, and development assistance helps China promote Chinese exports and service contracts. These effects were clearly demonstrated by a People’s Daily comparison between the debt forgiveness of 18.96 billion RMB (approximately $3 billion) in Africa and the newly signed service contracts worth $70.8 billion in the continent in 2014.

This is not the first time that China’s foreign aid has stirred up domestic opposition to Chinese generosity overseas. In 2011, China donated 23 school buses to Macedonia. The act raised enormous criticism in China for providing aid to a country with a GDP per capita higher than China’s, despite China’s own poor transportation system for its students.

The underlying questions revealed by the domestic controversy of China’s foreign aid are profound. On a global level, it reflects the clash between China’s developing-country identity and its rising national power as a global leader—and their respective, sometimes conflicting, demands. As a great power, China cannot and should not hide from its responsibility to the world in peace and development. Yet when it tries to carry the role, its domestic social and economic realities translate into doubts and constraints. On the national level, the problem of a mixed identity is further complicated by China’s political reality, in that some Chinese people view Beijing’s generosity as a means of gaining legitimacy internationally for the Chinese Communist Party by squandering its taxpayers’ money. On the state level, the authoritarian system and the un-democratic, non-transparent decision-making process pose additional questions to the purpose, soundness, and legitimacy of such aid decisions.

It remains to be seen how domestic criticisms will affect China’s foreign aid, including that to Africa. In the near term, Beijing is unlikely to backpedal on its existing commitments. But the vocal disagreement in China about the nature and content of the foreign aid program indeed illustrates the directions of its foreign aid reform in the long run. Chinese foreign aid is unlikely to remain solely at the government’s discretion, escaping legislative oversight indefinitely. Foreign aid legislation and the National People’s Congress’ approval of the foreign aid budget are already high on the reform agenda.

What does this controversy mean for China and for Africa?

For Africa, the effect will be mixed. First of all, tighter supervision and a more stringent review of China’s foreign aid budget and programs will potentially affect Beijing’s ability and flexibility to disperse foreign aid. The domestic scrutiny will very possibly make Beijing more cautious about announcing major aid packages to Africa. This could push China to prefer development finance, such as concessional loans to Africa, over free grants.

On the bright side, the domestic scrutiny of China’s foreign aid will eventually bring more transparency and accountability to China’s currently opaque foreign aid operations. This could lead to better regulation of China’s aid contributions to Africa, potentially bringing about the convergence of more coordination and cooperation with traditional Western donors. To improve the domestic image of China’s foreign aid, the Chinese government should enhance its domestic public relations campaign to raise awareness about the conflict and development challenges Africa has encountered.  This will rally more domestic political and economic support for Chinese investment in and contribution towards Africa’s future.

The controversy of China’s foreign aid could also provide more momentum for China to adopt international norms and best practice, such as the separation of non-commercial capacity-building programs and commercially related “tied aid” programs. Pragmatic as China is, the country is unlikely to give up foreign aid as a political and economic policy instrument completely, although better practices can be expected. As China muddles through its competing foreign and domestic agendas, Africa should adeptly navigate the changing tides.

This article originally appeared in Brookings’ Africa in Focus, on October 8, 2015.

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