Wrong About China

When I was in Ethiopia, one thing that struck me immediately was how big and visible the Chinese presence there is these days. While my travels were mainly restricted to the north of the country, virtually every road I came across that was under construction (and there were a lot of these) had Chinese staff overseeing the work. There were entire camps for workers in the road building trade, proudly flying a much larger Chinese flag alongside the Ethiopian one.

China scares a lot of people in development. Over the last two or three years, increasing attention has turned to the role of ‘new’ or ‘non-traditional’ donors. These labels are generally applied by what we would think of as the establishment donors: the US, UK, Scandinavian countries and the major multilaterals. They consider the ‘non-traditionals’ to be those donors who come from outside their cabal of policy voice: South Korea, India, China and Brazil being the most prominent. Given that some of the ‘establishment’ donors are relatively recent additions to the group of large-scale donors, and some of the ‘non-traditionals’ have long-standing bonds of mutual support with other developing countries I don’t think these labels really work. I find it more accurate to group donors along the lines of when they themselves developed. The first set of donors, centring around Europe and America, are the ‘first-generation’ of developers while the rest can broadly be classed as ‘second-generation’ developers. These two sets have different approaches to development.

China is the big one among the second generation donors, and just as China’s policy approach to increasing the power and wealth of its economy has a lot of Western policy makers and economists worried, so has its approach to its relatively new role in Africa begun worrying Western aid agencies. Generally, Chinese aid to Africa draws three major critiques from the first-generation donors. These are:

  • China’s aid is too unconditional – they do not penalise poorly or repressively governed countries and do not require the same standards of fiscal and economic management prior to undertaking massive aid projects.
  • Their self-interest is too great an influence on their aid – they focus too much on providing business to Chinese firms and in extracting resources for Chinese use, rather than the unalloyed betterment of the aid-recipient country.
  • They are far too opaque a donor – they do not provide sufficient information on the volume, distribution and modes of disbursement of their aid. This raises worries that their aid is not very user-friendly. China, for example, does not appear in AidData’s data set as a donor.

Having worked for a few Governments that receive aid from China, and seen up close the good and bad of all donors’ practices, I’m beginning to feel that the first-generation donors are wrong about China. Not only are the some of the criticisms they make of China’s modus operandi either incorrect or hypocritical, it also seems that China’s presence as a donor has a positive consequences that are insufficiently remarked.

China’s aid is largely (though not entirely) disbursed in the form of loans. Many Western observers take the position that China are giving out loans without due consideration of the human rights and economic management record of the Governments who are accepting these loans. This criticism strikes me as very hollow indeed. Firstly, it’s immensely hypocritical. I do not understand how Jeffrey Sachs gets to thank Meles Zenawi in his book and first-generation donors get to so much money into their Millennium Village Project, but China can be criticised for building roads there. Yes, Ethiopia’s governance leaves much to be desired, but building roads there is as obvious a win for a country with high internal transportation costs as running a bednets campaign. Of course, other donors can argue that they advocate for better governance alongside provision of support, but to my mind this is simply another reason for new donors not to replicate these efforts.

What’s more, it’s fallacious to assume that China is just financing any old thing that is requested as long as it gets access to minerals and gets to build roads. I’ve come across a few instances where requests for loan support have been turned down because the project made no sense or was too politicised. In one country, the President wanted to build a University on his private land using a Chinese loan. He was refused. Other vanity projects, such as a new football stadium, may get the go-ahead – but other donors also fund cultural activities. The money for all these activities might be better used to improve education, but it’s hardly the greatest crime in development practice nor a unique one.

Arguments about the motivation of Chinese support in Africa also strike me as off the mark. They do build roads and provide support in order to get access to natural resources, though this is not the motivation for all of their projects. Yet most donors started out this way, using aid as a method of pursuing mutual gain with developing countries. This is where the common practice of tying aid originated from, and while most donors have technically untied aid, it’s still striking how often contracts funded by a bilateral donor go to firms from that donor’s country. The extent of self-interest as a motivating factor in aid often changes as a donor extends its practice and develops further itself.

The idea of purely altruistic aid is a myth. Every single donor knows it is engaged in a multifaceted relationship with developing countries, some aspects of which are charitable or developmental and others of which are designed to meet their own interests. If China is extracting resources in exchange for cut-price road building projects, how does Europe have the moral high ground when it supports agricultural development on the one hand and the Common Agricultural Policy on the other? Or when the first-developed nations continue to impose a global trading regime which they know limits the possibilities for African countries to develop local industry with a measure of protection? I see no problem with aid being mutually beneficial to all parties – and with Chinese aid, it seems clear that most Governments believe it to be. African Governments do not sign away their natural resources without a bit of thought.

The final criticism is easily the strongest. There is no doubt that Chinese aid is too shadowy. In at least two countries where I’ve worked, information on the agreements signed with China was incredibly hard to come by – and this was while I was working in the External Finance departments of the Governments in question! Loan agreements can be found, but in-depth M&E and centrally collected information on the extent and distribution of support was much scarcer. When these projects run into problems, it can be much harder to see why these problems have arisen and what can be done about them. One of the roads under construction I drove on in Ethiopia was blocked by the workers, who claimed that they hadn’t been paid by their Chinese overseers. This is exactly the kind of incident that we need transparency about – if they really weren’t paid, why not? That should not be happening on any donor funded project.

Despite these criticisms, China’s modes of interaction with developing countries holds lessons for the West. In all of the countries I’ve worked in, people want more aid from China, not less. This is understood and acknowledged by the first-generation donors, who responded to pressure from developing countries in the Accra Agenda for Action:

South-South co-operation on development aims to observe the principle of non-interference in internal affairs, equality among developing partners and respect for their independence, national sovereignty, cultural diversity and identity and local content. It plays an important role in international development co-operation and is a valuable complement to North-South co-operation.

There is one major message here: most second-generation donors are far behind the first set in terms of many of the Paris principles, most notably failing to untie aid with sufficient speed and failing to use local Government systems of financial management. But they are way ahead on one of the most important ones: Ownership. While the first-generation donors talk about ownership incessantly while all the time trying to change and influence local policy, second generation donors simply assess the feasibility of a project and then fund it or refuse to fund it. These donors do not try and influence national development strategies, or impose conditions on what proportion of funding should be spent in which sectors (which is a very common General Budget Support conditionality) – they simply fund what is requested for, if it’s considered to be viable.

Developing country Governments appreciate this. It means they feel empowered to pursue their own vision of development, and thus it gives a stronger line of accountability to domestic stakeholders, since they can’t play the ‘donors made us do it’ card. It also means that it’s much simpler to engage with these donors than others: they will be assessed on the bottom line in development by their constituents, rather than their input and process indicators by foreign donors.

This is the single biggest lesson the desire to engage with China teaches us. Developing countries want simple aid that follows their desires, and want it so much that they will give access to their resources in exchange for it. That’s a really strong message that simply doesn’t seem to be getting through, and first-generation donors will find their influence waning fast if they don’t learn it before China and India expand even further into the aid landscape.

12 thoughts on “Wrong About China

  1. Dusan

    January 10, 2011 at 12:20pm

    Hey Ranilski,

    As you know I share your cautious optimism. However, it might be interesting to keep an eye on Zambia, an African country with longest and strongest ties with China. In the last elections, the opposition party almost won with a slogan almost as blunt as “Kick the Chinks out!”. Is this the future stance of other countries in the region?

    In stuff I read about China and development, one thing reoccurs quite often: Chinese lack of understanding in the local cultural dynamics can be astonishing sometimes. In fact, its a total lack of capacity to conduct research on that issue. “China Safari” (Serge Micheland Michel Beuret) often mentions cases where Chinese organizations needed to hire western Anthropologists for qualitative data! Although I think that can produce pretty funny results, I don’t think its makes sense for the Chinese on a long stretch.
    Maybe its just symptomatic of a young player in the donor game, but as time passes it can be counterproductive, as Zambia situation shows in so many ways.

    Anyways, love the post, keep writing!

  2. Ranil Dissanayake

    January 10, 2011 at 12:36pm

    Thanks, Dusan.

    I didn’t know that about Zambia, so I will look into that a bit more. Re: the cultural sensitivity stuff, I do think that’s probably largely down to them being relatively new to development aid, but you’re right, they’ll need to adapt much better. However, in another sense, it’s also one of their benefits: they just fund and stay out of things.

    The example of Zambia, though, suggests things might be more complicated if the access to resources is too big a factor.

  3. swahilistreet

    January 10, 2011 at 6:09pm

    An excellent post. Tangentially, I find Chinese business people to be much more adaptable and far more willing to learn the language than other expatriates – and do so very well. I guess we can call that cultural sensitivity. If you are running a complex distribution and trade network across town from a base in Chang’ombe, it’s an obligation. If you are in charge of a multi-million NGO or bilateral aid budget and you are based on the peninsula…. not so much.

  4. Dusan

    January 10, 2011 at 7:42pm

    :) Good point Swahilistreet!

    I also have seen remarkable cases of Chinese adapting. Heck, in my country, Serbia, a certain Chinese dude is often seen on television, speaking fluent Serbian.
    Adaptation comes often out of necessity. As old donors and bosses, UK, France and US have solved the language issue by imposing their languages and culture. No effort needed there anymore. The Chinos however, need to put much more effort in order to thrive in a place so foreign to them.
    Its a snap, but there is some truth in it I think.

    Also maybe a fun example might add to discussion.

    A year or so ago, I attended a ‘victims of HIV/AIDS memorial service’ in Lilongwe, Malawi (Ranil and I both lived there at the time)… The whole shabam of officials, even the president was there for a ‘cultural’ manifestation. Long and tedious program. But, in the middle – a performance by ‘Malawi-China friendship cultural group’! A Dance! Mind you this was happening at the city stadium.
    They come out dressed in nothing but leopard skin speedo type thingies, and -in perfect Chichewa- say they have prepared a traditional dance. Suddenly the Lion King music starts….. I’ll spare you the details.
    Firstly, I really agree that China in Africa is a great thing! Gives choice at least! However, it would be pity to give them too much credit just because of the resentment towards Westerners (which is totally understandable, a frustrated Serb agrees).
    I’ll end quoting a friend that works in China: ‘They might know my language, and might love doing business with me, but they still think I’m a monkey’

  5. Ranil Dissanayake

    January 11, 2011 at 6:07am

    Swahilistreet – that is a completely fascinating blog. thanks for linking it.

  6. swahilistreet

    January 11, 2011 at 9:09am

    it’s good isn’t it? Possibly the best blog to have ever come out of Tz. One of the that upon stumbling across it, I sat down to read from the first entry to the last.

  7. Duncan

    January 11, 2011 at 9:48am

    I too think the negatives of Chinese assistance have been overstressed, but one aspect of the lack of transparency that you don’t mention is that the cost of this aid is rarely mentioned. Indeed, in many cases it is impossible to actually find reliable data on the total amount loaned. As a result it is difficult to tell whether the loans (and we are usually discussing loans, not grants) are pushing countries towards an unsustainable debt load. Generally speaking one would hope that most aid projects, being concentrated in infrastructure, would pay for themselves in productivity gains, but it would still be good to know the cost. An interesting aside on this is that Chinese extension of debt to developing countries, especially in Africa, may be less dangerous than earlier lending to the emerging world precisely because it is self-serving, with countries gaining the ability to service the debt via increased exports to China. Look for concerns about debt sustainability/default to re-emerge should China’s growth pattern falter though.

  8. Ranil Dissanayake

    January 11, 2011 at 11:10am

    Duncan – The Governments involved know how much they are borrowing and on what terms. Most Governments borrowing from China have debt sustainability policies now in this post-HIPC world, and can run analyses that show the exact level of sustainability of their debt portfolio before and after a project is signed.

    There is a possibility that politicians over-ride these fears and sign more and more loans, true. I guess we will see as time goes on. However, what agreements I’ve seen didn’t look to be on such bad terms. Plus plenty of other established loan-financed donors are pushing loans at previously heavily-indebted countries, including the African Development Bank and World Bank.

    This is something to keep an eye on, though.

  9. Brooke Russell

    January 12, 2011 at 5:45pm

    China for years, though all of their efforts have been rebuffed. For anyone interested though, AidData has collected information on China’s foreign aid from the China Commerce Yearbook and the Almanac of China’s Foreign Economic Relations & Trade agencies. You can access the data here:

    http://www.aiddata.org/research/china

    This is only a subset of Chinese foreign aid from 1990-2002, but hopefully it is just a first step!

  10. Brooke Russell

    January 12, 2011 at 5:47pm

    Oops, it looks like the first two lines of my comment got cut off–it should read:
    Great post. It’s true that China’s aid is incredibly opaque. My colleagues at AidData have been trying to get more systematic and complete data for China for years, though all of their efforts have been rebuffed. For anyone interested though, AidData has collected information on China’s foreign aid from the China Commerce Yearbook and the Almanac of China’s Foreign Economic Relations & Trade agencies. You can access the data here:

    http://www.aiddata.org/research/china

    This is only a subset of Chinese foreign aid from 1990-2002, but hopefully it is just a first step!

  11. Ranil Dissanayake

    January 13, 2011 at 5:32am

    Thanks for the link Brooke.

    By the way, have you attempted to use local aid management databases to get info on China? A number of countries operate local databases as a method of tracking disbursements, expenditure etc. according to their own budget codes and national development strategies. Some I’ve seen include the China data (though it remains incomplete, to be sure). If you’re interested in hearing more, e-mail me from the contact section of the website.

Comments are closed.