國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
‧
國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
15
Chapter 2
China and South Korea’s foreign aid system
2.1 China’s foreign aid system
China presents a unique foreign aid system. It was founded on a much different motivation than those of Western countries and has not followed the standard of its peers. We describe their aid system in more details below.
2.1.1 Total amount and the amount to Africa
Officially, details of Chinese foreign aid figures have been kept confidential.50 The Chinese government only announced that they had spent a total of $30 billion (including $ 13billion of grants) in aid since 1950s.51 However, there is no detail by region, type or sector. There is much speculation regarding the total amount and the portion allocated to Africa because the Chinese government has not revealed the exact amount of foreign aid given. According to the US Congress Research Service, PRC’s grant and debt cancellation toward Africa was estimated at 2.7 billion USD from 2002
50 中国商务年鉴 2004, 中国商务年鉴 编辑委员会 编，中国商务年鉴出版社, 875. According to the ministry, they do not produce any information of their foreign aid. (中国也提供援助，但未提供数 据.)
51 Chinese Premier Wen Jiabao anounced that at a high-level meeting on the Millennium Development Goals in 2008. Source: http://www.china-embassy.org/eng/zmgx/zmsbzyjw/C/t515279.htm (accessed on May 22, 2011). Wen said that 206.5 billion yuan (including 90.8 billion yuan free aid) have been provided. The figure was converted by USD by Brautigam, Brautigam (2009), op cit., 165.
‧
to 2007.52 Brautigam (2009), one of the experts on Chinese foreign aid to Africa, argued that the total amount of Chinese foreign aid in 2007 was estimated as 3,046 million USD and the amount of money to Africa 1,380 million USD53 as shown in Table 1, but she could not provide more detailed data which would be of interest for our research.
Table 1: Chinese aid from 2003 to 2009
(Unit: USD million) 2003 2004 2005 2006 2007 2008 2009 A. Total Chinese Aid (B+C+D) 1,314 1,498 1,787 2,172 3,046 n/a n/a B. China official budget for
external assistance
631 733 912 1,028 1,466 n/a n/a
C. Exim bank concessional loans 233 315 425 693 1,130 1,842 3,003 D. Chinese debt cancellation 450 450 450 450 450 450 n/a E. Total Chinese aid to Africa
(F+G+H)
769 753 861 1,030 1,380 1,811 2,476
F. Official budget for external assistance to Africa
278 220 273 309 440 515 600
G. Exim bank concessional loans to Africa
117 158 213 347 565 921 1,501
H. Debt relief to Africa 375 375 375 375 375 375 375 Source: Brautigam (2009), op cit., 317.
52 Lum (2009) et al., op cit., 7.
53 Brautigam (2009), op cit., 317.
‧
Even though China’s foreign aid has only recently been spotlighted, China’s foreign aid has a long history starting from the 1950’s contrary to what many people believe.
Reflecting on many experts’ opinions54 and our research, we can categorize Chinese aid history into four stages: Phase I (1950-1974), Phase II (1974-1990), and Phase III (1991-2000), and Phase IV (2001-present).
Phase I (1950-1974) can be summarized as a stage of ideological aid to obtain political support from the outside world. The aid environment to China was not so friendly because the Cold War was in progress and moreover, there was even diplomatic competition across communist lines with the Soviet Union. At that time, there was serious diplomatic competition between China and Taiwan, so the establishment of official diplomatic ties was normally followed by aid assistance.55 Former Chinese Premier Zhou Enlai’s eight principles56 which were announced when he traveled to Africa in 1964 were produced in this context. To attract attention from the Third World including African, Asian and Latin American countries and
54 Li, Xiaoyun (2008), “China’s Foreign Aid and Aid to Africa: overview”, 2-4. Source:
http://www.oecd.org/dataoecd/27/7/40378067.pdf (accessed on May 22, 2011) and Brautigam (2008b), op cit., 8-12.
55 Brautigam (2008b), op cit., 8.
56 Former Premier Zhou Enlai’s “Eight Principles for China’s Aid to Foreign Countries“ in 1964 can be summarized like this: i) equality and mutual benefit, ii) respect for sovereignty, iii) form of interest-free or low-interest loans, iv) support for recipient countries‘ self-sufficiency, v) efficient aid, vi) provision of best equipment, vii) transfer of required techniques, viii) the same treatment between Chinese experts and locals.
‧
break through the international isolation, China declared the principles focused on equality and mutual benefit in the field of foreign aid.
After moving to Phase II (1974-1990), China began to open up their economy in the 1980’s, its aid goal also started to take on a perspective that was more economical in nature. Because Beijing made some adjustments in its domestic economic policies as well as its aid projects, Beijing announced a relatively small amount of new projects.57 When Former Chinese Premier Zhao Ziyang visited Africa in 1982, he said that China would diversify in aid forms which implied a change from unilateral support to mutual economic cooperation.58 The Chinese government apparently seemed to recognize the benefit of the spillover effect between external aid projects and domestic economic growth.
In the 1990’s of Phase III (1991-2000), China refocused its relationship with African countries facing the Tiananmen Square Incident in 1989 and checkbook diplomacy competition with Taiwan in the 1990s. Even while expanding its aid volume, Beijing still had considered the effectiveness of its foreign aid toward underdeveloped countries. Former Premier Li Peng, on a trip to six African countries in 1997, made a comment that reflected those concerns: “China’s basic policy of providing aid to Africa has not changed (but)…China’s policy has moved from aid donation to economic cooperation for mutual benefit”. 59
57 Li (2008), op cit., 3 and Brautigam (2008b), op cit., 10.
58 Brautigam (2008b), op cit.,８.
59 Brautigam (2008b), op cit., 12.
‧
In Phase IV (2001-present), China apparently seems to have recognized itself as a big country to compete with other developed donors. To take hegemony to the ID field, they started to hold the FOCAC in October 2000 for the first time. Many experts interpret the purpose of the establishment of this meeting as being to solidify economic ties with African countries including obtaining a supply of natural resources as well as to show its influence as a responsible player. In this sense, they tried hard to secure natural resources and support the efforts of Chinese companies to win contacts and establish ventures in developing countries.60 In 2006, President Hu Jintao committed to double the 2006 level of aid to Africa over the next three years.61 It was not officially announced, but we found through our research that some adjustment activities such as reducing new projects in 2005 were observed to process such huge commitments.62
2.1.3 Governance
The State Council is the highest authority to make major decisions regarding foreign aid policy.63 Under the coordination of the council, the Ministry of Commerce (MOFCOM) is in charge of governing China’s aid program including concessional loans and grants.64 To support this program, the Ministry of Finance (MOF) on consultation with MOFCOM is responsible for preparing the foreign aid budget.
The Ministry of Foreign Affairs (MOFA) is in charge of China’s Africa policy and
60 Brautigam (2008b), op cit., 10.
61 Source: http://chinadigitaltimes.net/china/africa-summit/ (accessed on May 21, 2011)
62 We will elaborate on that in the section of Chapter 3.
63 Lancaster, Carol (2007), “The Chinese Aid System”, Center for Global Development Essay, 3.
64 Davies (2008), op cit., 13.
‧
國立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
‧
國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
20
controls Chinese embassies in the region. The Exim bank of China covers concessional loan financing. Diagram 1 shows the foreign aid governance structure of China.65
Diagram 1: Governance of Chinese foreign aid
65 Brautigam (2009), op cit., 108.
‧
國立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
‧
國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
21