Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 93
Foreign aid from China is often characterized as rogue aid that is not guided by recipient need but by Chinas national interests alone. However, no econometric study so far confronts this claim with data. We make use of various datasets, covering the 1956-2006 period, to empirically test to which extent political and commercial interests shape Chinas aid allocation decisions. We estimate the determinants of Chinas allocation of project aid, food aid, medical staff and total aid money to developing countries, comparing its allocation decisions with traditional and other so-called emerging donors. We find that political considerations are an important determinant of Chinas allocation of aid. However, in comparison to other donors, China does not pay substantially more attention to politics. In contrast to widespread perceptions, we find no evidence that Chinas aid allocation is dominated by natural resource endowments. Moreover, Chinas allocation of aid seems to be widely independent of democracy and governance in recipient countries. Overall, denominating aid from China as rogue aid seems unjustified.
Aid allocation Chinas foreign aid new donors donor motives