China’s shifting global strategy on foreign aid
China’s Shifting Global Strategy on Foreign Aid
WRITTEN BY MAHIMA DUGGAL
10 March 2021
In a noteworthy move, the Chinese government released a new white paper, titled “International Development Cooperation in the New Era” on 10 January 2021, updating its 2011 and 2014 foreign aid white papers. The document marked the beginning of a new strategy for the Chinese Communist Party (CCP), in keeping with the international climate that it faces.
China’s foreign aid program has gradually emerged as a critical variable in its foreign policy strategy, vital to President Xi Jinping’s ‘project of the century’, the Belt and Road Initiative (BRI). Foreign aid diplomacy has shaped China’s international economic profile, transforming its image from a developing economy to an economic powerhouse at the centre of global supply chains, thus making it a critical financier of development projects in the global south. As the white paper records, from 2013 to 2018, China spent more than 270 billion yuan on foreign aid in the form of grants, interest-free loans and concessional loans.
Nevertheless, frequently embroiled in controversy, China’s “external assistance programs” have been historically motivated by a desire to check (if not entirely contain) the United States’ involvement and influence in the region — such as through food and military assistance to North Korea and Vietnam. Now, with the strategic and geopolitical competition between Beijing and Washington DC intensifying, what does the new white paper mean for the recipient countries and the region? How is it different from China’s previous foreign assistance model?
A new strategy drawn on Chinese characteristics
In essence, the new strategy paper, released by the State Council Information Office of the PRC, upgrades the country’s already robust foreign assistance program to a revitalised model of international development cooperation between Beijing and partner states on a bilateral and multilateral basis, through the introduction of new and far-reaching initiatives aimed at “achieving greater results”. It sets China’s humanitarian assistance under a South-South cooperation framework that promotes economic and social development. The 49-page document is divided into eight sections: China’s philosophy underpinning assistance; new strategies for progress; policy coordination under the BRI; active contribution to the UN Sustainable Development Goals; solving global challenges in pursuit of “common, comprehensive, cooperative and sustainable security”; supporting capacity building for independent growth of recipient states; strengthening bilateral and trilateral modes of engagement; and lastly, the future prospects for the program.
The new white paper thus indicates the beginning of a new policy that is more altruistic than pragmatic. Rather than driving its international assistance based on the commercial interests of the Chinese private sector, as has been the case so far, Xi is looking to implement a state-centric command structure in which the international development cooperation is drawn on public interest.
The new white paper bills Beijing’s new international development assistance strategy as an extension of Chinese national character and more importantly, President Xi Jinping’s vision of a global human community of a shared future. It is framed as the country’s willingness to share its successful experience and giving back to the international community for the support it received as a developing nation.
Amid its South-South focus, the paper places the BRI at the centre of its plans for the future, by moulding it into a broader initiative guided by the achievement of the UN 2030 sustainable development goals. It aims to overcome the COVID-19 pandemic’s threat to the UN’s agenda by making development an inclusive concept — concerned with not only trade and infrastructure construction but also the realisation of “peace, prosperity, opening up, innovation, green development, cultural exchanges and clean government”. It highlights Beijing’s intentions to move beyond its regular forms of aid (grants, loans and turnkey projects) to assist partner nations with growth and development planning — a key pillar of the Chinese governance model.
Furthermore, in an implicit reference to the criticisms that Beijing has met, the white paper explicitly states that moving forward, China will prioritise and be closely involved in the operation and evaluation of the project so as to ensure their quality and maintain the “reputation and credibility of China-aid projects”. It further states that China would engage in bilateral consultations to discuss the difficulty in debt repayments and make sure small economies were not caught in a debt trap. To ensure the sustainability of the program, Beijing also pledged to provide technical and skills training to the local companies and personnel.
From ‘foreign aid’ to ‘international development cooperation’
The most salient point of departure of the new white paper from China’s development assistance approach lies in the policy paper’s very title: it replaces the previous “foreign aid” terminology with “international development cooperation”. The change is not merely one of semantics but denotes a more profound shift in tactics and a policy that is much more ambitious and reflective of Beijing’s emerging international outlook. While China’s foreign aid program has traditionally been narrowly focused on physical infrastructure and connectivity development projects and technical cooperation, this white paper marks the onset of a shift to a broader and more comprehensive focus.
In keeping with the idea of foreign aid with Chinese characteristics and under Xi’s community with a shared future for mankind, the document introduces a more mature and sophisticated program with new instruments that enhance Beijing’s aid capacity. Unlike the 2011 and 2014 papers, the 2021 white paper accords key focus on humanitarian aid and, for the first time, brings in areas like gender equality, environmental sustainability, innovation and strengthening governance.
Such tactics are primarily meant to add legitimacy to China’s foreign aid program that has often been criticised as a ‘charm offensive’ strategy. This has also been the dominant narrative for Beijing’s ‘vaccine diplomacy’ in recent months, which has been censured for being an attempt to deflect criticism over Beijing’s early handling of the pandemic, redeeming its tarnished reputation and portraying itself as a global health leader. Essentially, Chinese financing is considered a strategy through which Beijing seeks to make the poorer countries more debt prone and hence more vulnerable, so as to facilitate China’s political and strategic objectives. In other words, China’s foreign aid has been labelled a soft power tool acting as an instrument of influence to buy more geopolitical clout and extend and strengthen Beijing’s sway in smaller and middle power economies, hence threatening the regional order.
Although the United States’ foreign aid program has also been framed as a soft power strategy, where it differs from Chinese assistance is in its adherence to international norms and standards. Developed countries under the Development Assistance Committee (DAC) largely provide assistance through collaboration with civil society with over 80 per cent of their total aid being in public health and education sectors. China, on the other hand, has focused on domains that provide mutual benefit and is, therefore, more self-interest driven; development of physical infrastructure under the BRI for instance essentially trickles down to economic benefits for China.
As China attempts to compete with the United States and the West, it is becoming increasingly important that its foreign assistance program evolves to incorporate a clear divide between business interests and aid.
For instance, as China’s foreign aid increasingly competes with Japan’s official development assistance (ODA) – which boasts of an edge in terms of transparency and compliance with prevailing international standards as set by the Organisation for Economic Cooperation Development (OECD) – shifting tactics will be critical. Although Japan cannot match the massive amount of funding available under the BRI, it is gradually refocusing on quality infrastructure development in the Indo-Pacific through initiatives like the $110 billion Expanded Partnership for Quality Infrastructure (EPQI), by capitalising on its reputation for being the ‘gold standard’ for lending in the region.
In other words, as Chinese financing is condemned for lack of data transparency and imposing unsustainable debts, Japan’s ODA offers countries in the region a more reliable partner for joint development projects. To China, no other international actor poses the type of challenge that Japan brings with its assistance program. Under such circumstances, China’s shift in strategy, as denoted by the change in nomenclature, is meant to accord more sanguine legitimacy to its aid diplomacy, along the lines of Japan’s credibility. Moreover, there is no better time to demonstrate a change in tactics than when the Coronavirus-inflicted world is fighting to overcome economic difficulties while exploring ways to continue with developmental goals (amid devastation to economies).
Altruism over pragmatism
Notably, China’s shift in strategy takes place in the context of a global pandemic and a changing regional security environment that has seen the debate on China’s intentions and ‘wolf warrior’ diplomacy re-enter the spotlight. As the world grappled with the social and economic consequences of COVID-19, China embarked on ‘mask diplomacy’, an effort that has sought to advance rhetoric pushing its emergence as a responsible global leader. In donating medical equipment and expertise, it sought to build a narrative based on benevolence to further its foreign policy objectives — such as those relating to the use of Huawei in 5G networks across the globe.
In some cases, Beijing was also found to be pressurising foreign authorities to release statements and pass resolutions declaring their support for China and its response towards the virus. This, along with Beijing’s assertiveness (if not aggression) in the Indo-Pacific region, has resulted in a global backlash against China, with countries increasingly questioning its hidden agenda and framing its efforts as manoeuvres to garner geopolitical influence.
In such circumstances, the 2021 white paper is a clear attempt to reverse such a narrative and bolster China’s global standing as a responsible partner. In fact, the document unambiguously states that if its foreign assistance programs are faced with a dilemma between public good and self-interest, China will prioritise the public good, which is difficult to accept given China’s past practices. In other words, it will treat its partner nations as equals and refrain from “[imposing] its own will on them, [attaching] political strings, or [pursuing] political self-interest”. This marks a significant shift from the CCP’s previous discourse on foreign aid, which was largely driven by pragmatism serving self-interest than any pretence of idealism.
The new white paper thus indicates the beginning of a new policy that is more altruistic than pragmatic. Rather than driving its international assistance based on the commercial interests of the Chinese private sector, as has been the case so far, Xi is looking to implement a state-centric command structure in which the international development cooperation is drawn on public interest. However, the potential ramifications for such a shift on Chinese companies could be considerable, as they are no longer prioritised in China’s foreign assistance calculations, possibly even leading to unrest domestically.
This adjustment is not entirely removed from the trajectory of reform which Xi Jinping has sought to initiate over the past few years. Beijing first introduced the term “international development cooperation” in the establishment of the much-discussed China International Development Cooperation Agency (CIDCA) in April 2018, as part of its ongoing process of reforming its foreign aid program. However, its institution in a policy brief is a significant development, suggestive of a new BRI-led policy that refocuses on internationalism in China’s foreign aid practices.
Nevertheless, for Beijing, policy documents and white papers have always been a combination of its philosophy and CCP propaganda, furthering the narrative that it is looking to construct for its overseas audience. Whether its lofty ambitions under the international development cooperation program translate into practice remains to be seen.
DISCLAIMER: All views expressed are those of the writer and do not necessarily represent that of the 9DASHLINE.com platform.
Author biography
Mahima Duggal is an associated research fellow at the Stockholm Centre for South Asian and Indo-Pacific Affairs (SCSA-IPA) of the Institute for Security & Development Policy, Stockholm, Sweden. She is also an editorial assistant to the Series Editor for Routledge Studies on Think Asia. Her research focuses on Indo-Pacific, having special importance attached to South Asian affairs. Ms Duggal graduated top of her class with a master’s in international security from the Department of Politics and International Studies, University of Warwick (UK). Image credit: Department for International Development/Flickr.