Chao Zhang is an assistant professor at the Institute of European Studies from the Chinese Academy of Social Sciences.

The article was originally published in IDEES, No. 52, 2021.The article has been authorized.

China’s rapid rise as an aid donor in the past two decades is one of the most dramatic changes in the global development aid architecture. Today, the influence of China’s aid has been witnessed in many underdeveloped countries across Asia, Africa, and Latin America. There is little doubt that China’s aid has become indispensable in helping the world eradicate poverty and deal with challenges that all humankind faces, such as global warming and infectious diseases. China’s booming aid investment and its aid concepts and approaches that are different from traditional donors have triggered heated discussions. It seems that China is marching toward a leading role in the aid realm. However, a closer look at the picture reveals some formidable challenges in its path.

China’s rise as an aid donor

Although China is regarded as an emerging donor, it has been giving aid since as early as 1950. In the first thirty years of the People’s Republic, China invested heavily in aiding its comrade partners. The aid spending, which went far beyond China’s capability, was deemed unsustainable. After 1980, when China decided to reform and open its doors, the aid budget was drastically slashed to fit its identity as a poor developing country. In the early 2000s, Chinese leaders proposed the “Go global” strategy to encourage enterprises to explore foreign markets. Since then, driven by the strategy and fueled by China’s fast-growing economy, its role in the global aid architecture has become increasingly prominent.

China’s most visible change in development aid in the past two decades is the breathtaking growth of spending. According to China’s first white paper on development aid published in 2011, China’s financial resource for aid increased by an average of 29.4% every year from 2004 to 2009. As estimated by Naohiro Kitano, a long-time researcher of China’s aid, aid spending saw sharp growth in the first decade of the 2000s, from around $0.7 billion in 2001 to $3.7 billion in 2010. Despite some fluctuations, China’s aid disbursement retained overall growth from 2011 to 2019 and peaked in 2018 and 2019 with $6.8 billion. The figure makes China the seventh-largest sovereign donor in the world in 2019, after the United States (US), Germany, United Kingdom, Japan, France, and Turkey.

With the aid budget growing, China has been trying to reform its aid regime to serve its aid actions better. China’s aid agency has been long affiliated to its economic authority as a low-level department. This makes it challenging to coordinate aid activities carried out by ministerial institutions and makes China’s aid deeply entangled with its commercial interests. In 2018, as part of the overall reform of central government institutions, the China International Development Cooperation Agency (CIDCA) was established. As an agency directly under China’s State Council, CIDCA is envisaged to help streamline China’s aid regime and provide leadership for its aid actions. At the same time, the Chinese research community on development aid has been growing. An increasing number of Chinese researchers at universities and think tanks with different disciplinary backgrounds have begun to pay attention to China’s aid history and practices. The number of published academic articles, monographs, and editions of books has been multiplying. Today, development study is turning from a topic on the fringes of Chinese academia to a cherished one.

Moreover, China’s aid practices abroad and battle against poverty at home have triggered traditional donors and developing countries’ interests. Instead of the “giving–receiving” relationship, China stresses “reciprocity” and “partnership” principles in its relationship with other developing countries and takes aid actions as helping hands for its “poor brothers”.

In practice, China’s aid operations are usually more efficient than traditional donors and do not interfere with recipient governments’ ownership. Moreover, China focuses on the economic infrastructure sector instead of education, gender, and environment, which traditional donors underline. This makes China’s aid attractive to the developing countries overwhelmed by lengthy procedures and hungry for infrastructure investment. For traditional donors, although they have transferred trillions of dollars to the developing world in past decades, today, prosperity remains an unfulfilled promise for many countries. China’s remarkable poverty reduction achievements and its development aid seem to provide an alternative. Although there are concerns that China’s aid might erode the attractiveness and effectiveness of aid from traditional donors, they wish to learn from China’s best practices, which gives China’s aid practices added value.

The limits of China’s development aid

China’s role in the global aid architecture has risen dramatically, and it seems to have the potential to play an even more prominent role. However, on the road to this goal, China still faces some key challenges.

Limited resource input. Despite rapid growth in the past two decades, China’s aid input is still small compared with some major donors. China’s current aid investment is only around one-fifth of the US and one-third of Germany. It is widely agreed that developed countries should spend 0.7% Gross National Income (GNI) on aid. In 2019, the average spending level of Organization for Economic Cooperation and Development (OECD) countries was 0.3% GNI, among which the European Union (EU) member states collectively provide 0.47% of ODA as a share of GNI, and the number for the US was 0.16%. According to estimates, China’s aid budget occupied only 0.047% of GNI in 2019. Although China does not have to take the same responsibility as developed countries do, if China intends to play a more critical role in development aid, it will have to raise aid expenditure substantially.

However, China faces considerable obstacles in doing so, one of which is the lack of public support. China claims that it has achieved a decisive victory in eradicating absolute poverty (with a poverty line of $2.3 per day) in 2020, but many people are still having significant difficulties in their lives. In fact, if the poverty line ($5.5 per day) set by the World Bank for upper-middle-income countries, of which China is one, is applied, more than 300 million of the Chinese population were still in poverty in 2016. It is easy to forget that China is still an aid recipient country. In 2019, China received around $1.4 billion worth of aid from donors around the world. Further improvement of its own people’s lives remains the foremost priority of the Chinese Communist Party and the Chinese public’s primary concern. In this context, it is not easy to expect the public to support China’s generous aid actions. Therefore, Chinese aid policymakers have to be very careful in spending money.

Limited policy formulation and research capabilities. The CIDCA, established in 2018, despite the bureaucratic upgrade of China’s aid authority, has proven it is challenging to meet public expectations. With a team of around only 100 personnel, the deputy-ministerial agency is incapable of providing strong leadership for China’s aid activities. China’s aid regime remains highly fragmented since the implementation of aid actions, such as training, has been put in corresponding ministries. In terms of aid research, although more and more Chinese researchers and institutions have begun to work in this field, China’s aid research industry is still in its infancy compared with the US and Europe. There are only a handful of Chinese institutions devoted to development studies, and the number of students enrolled in the area remains modest.

China’s weak policy-making and research capability comes with a price. Without sufficient knowledge on and capability of managing innovative aid modalities, China’s aid has been disbursed through only some simple ways, such as building complete projects, delivering goods and materials. This might harm the full realization of the potential of China’s aid. Moreover, the construction of China’s aid statistical and evaluation systems is still at the beginning. The absence of such systems makes China’s aid difficult to understand for observers, and thus generates suspicions at home and abroad. In addition, without evaluations on project, country, and thematic levels, it is difficult for Chinese policymakers to be accurately aware of the consequences of their aid decisions, let alone learn from past practices and improve.

Limited participation in global development governance. China has become more and more active in dialogue and cooperation with traditional donors and international organizations. It has carried out aid projects with traditional donors in the form of triangular cooperation. For example, Chinese experts worked with American counterparts in Timor-Leste to raise local agricultural productivity and worked with Australian colleagues in Papua New Guinea to help contain malaria on the island. Regarding its cooperation with international organizations, China has donated to many of them and set up trust fund programs with such organizations as the United Nations Educational, Scientific and Cultural Organization and the Food and Agriculture Organization.

However, China has always been more inclined to assist via bilateral means and has been cautious in collaborating with traditional donors. China’s recent white paper on development aid, published in January 2021, shows that less than 5% of China’s aid budget was disbursed through multilateral organizations from 2013 to 2018. Regarding its cooperation with traditional donors, while China says it holds an open attitude, it emphasizes that recipients’ sovereignty and controlling voice must be respected, and projects should be proposed, agreed upon, and led by the recipient countries. China is concerned that if it is too close with traditional donors, it might be perceived as a new traditional donor, threatening its noninterference principle in diplomacy.

COVID-19 and China’s development aid

The outbreak of COVID-19 resulted in the boom of aid needs and tested China’s aid capacity. When the virus spread to the rest of the world, China quickly activated its aid machinery and finally launched the most extensive humanitarian aid operation in its history. According to the Chinese government, masks, ventilators, test kits, and so on were delivered to 150 countries, and 29 medical expert teams were dispatched to 27 countries by the end of May 2020. Also, China donated $100 million to the World Health Organization, gave $50 million to the COVID-19 Global Humanitarian Response Plan launched by the United Nations, and committed to providing two billion dollars to developing countries in the next two years. Now, China is providing COVID-19 vaccines it produces to other countries in the form of aid. Reportedly, millions of doses of Chinese vaccines had been given to 69 countries by the end of February 2021.

For China, such large-scale aid action is unprecedented, but it does not make China outperform other significant donors and enhance its aid influence. This has become particularly true since China has delivered its aid mainly through a government-to-government manner and mostly left the multilateral stage to traditional donors. The COVID-19 Global Humanitarian Response Plan, which is produced to feed global humanitarian needs by accruing $10.3 billion, has collected donations from governments, international organizations, enterprises, and individuals. However, as of early March 2021, Chinese contribution took only 0.7%, with traditional donors (US, Germany, EU, United Kingdom, and Japan) taking the top ranking. As far as the vaccine aid is concerned, the COVID-19 Vaccines Global Access (COVAX) initiative was launched jointly by the World Health Organization, European Commission, and France in April 2020. By the end of February 2021, donors worldwide had committed around $11 billion to the project, but China was absent from the list, except for a commitment of 10 million doses of vaccines. The COVID-19 pandemic provides an opportunity for China to exert more significant influence in aid, but China seems not to want to join the developed donors and take a great leap forward in aid.

Moreover, the political struggle surrounding the pandemic has led to a battle of narratives over China’s aid. Actually, in the context of China–US confrontation and the EU’s recognition of China as a “systemic rival,” China has encountered a troublesome narrative problem in recent years. In the case of development aid, China tries to shape its generous aid as a manifestation of good wishes from the Chinese people and the fulfillment of its responsibilities as a major country. However, in the eyes of some foreign observers and government officials, China’s aid resources carry the mission of achieving its geopolitical goals. Against this backdrop, aid has become an area of dispute between China and some countries. Such disputes can tremendously undermine China’s efforts to play a more prominent role in aid.

Concluding remarks

Development aid has always been an instrument serving China’s diplomacy. In the past years, under the leadership of President Xi Jinping, China has turned to a more proactive foreign policy, and proposed the “Belt and Road” initiative and the vision of “a global community of shared future.” With these attempts, China aims to play a more important, if not leading, role in global affairs. The new diplomatic ambition, combined with growing economy and inspiring development story, show that China possesses the potential to become an aid superpower. However, the public hostility at home, weak policy formulation and research capabilities, limited integration with the international aid architecture, and the narrative problem around China’s aid restrict China’s willingness and ability to play a more influential role in the field.

The good news is that Chinese policymakers are well aware of the limits and are willing to take reform actions. In the 2021 white paper on development aid, China declares that it will endeavor to improve aid capacity by, for example, devising medium and long-term aid plans; formulating and improving aid laws, regulations, and institutions; and improving the aid statistical indicator system. Moreover, China announces that it will strive to integrate its diplomacy and development strategy with major global development initiatives and reiterates its willingness to dialogue and cooperate with international organizations and traditional donors.

Looking into the future, it is reasonable to expect that China will keep investing heavily in aid, diversifying aid modalities, strengthening collaboration with other donors, and finally becoming an aid superpower. But, at present, the expectations for China’s development aid have to be realistic.