China s Aid Approaches in the Changing International Aid Architecture

China s Aid Approaches in the Changing International Aid Architecture Mao Xiaojing Deputy Director, Associate Research Fellow Chinese Academy of International Trade and Economic Cooperation (CAITEC) MOFCOM, China November 28, 2012

Contents A Changing International Aid Architecture China s Foreign Aid Policies Features of China s Aid Practices Looking Forward of China s Foreign Aid One Question

A Changing International Aid Architecture Table 1. Net Aid Disbursements by Different Actors USD million 1998-1999 2005 2006 2007 2008 2009 1. ODA by DAC members 52 910 107 838 104 814 104 206 122 359 120 000 Proportion in total 88.03% 85.70% 84.40% 82.12% 79.33% 80.69% 2. ODA from non-dac donors 1 1 024 3 175 4 617 4 333 8 094 6 672 Proportion in total 1.70% 2.52% 3.72% 3.41% 5.25% 4.49% 3. Net grants by NGOs 6 173 14 823 14 749 18 352 23 787 22 047 Proportion in total 10.27% 11.78% 11.88% 14.46% 15.42% 14.82% Total 60 107 125 836 124 180 126 891 154 240 148 719 Note: None-DAC donors only include those countries or territories reported to OECD, around 20 countries. The other non-dac donors, such as China, India, Brazil, Russia and etc, are not included. These countries are categorized as emerging donors.

USD billion % A Changing International Aid Architecture Aid volumes from DAC members are increasing, but their proportion in the total international aid flows is decreasing. 140 120 100 80 60 40 20 0 1998-1999 2005 2006 2007 2008 2009 90 88 86 84 82 80 78 76 74 volume proportion

A Changing International Aid Architecture Yet, the DAC members are still the dominant players and rule makers in the international aid arena. 2008-2009 1998-1999 1988-1989 0% 20% 40% 60% 80% 100% France Germany Japan United Kingdom United States

A Changing International Aid Architecture Non-DAC donors are expanding in number and scaling up their aid, but their impacts are more limited within regions. 2005 2006 2007 2008 2009 Memo : 2009 ODA/GNI (%) OECD Non-DAC Czech Republic 135 161 179 249 215 0.12 Hungary 100 149 103 107 117 0.10 Iceland 27 41 48 48 34 0.32 Israel a b 95 90 111 138 124 0.06 Poland 205 297 363 372 375 0.09 Slovak Republic 56 55 67 92 75 0.09 Slovenia 35 44 54 68 71 0.15 Turkey 601 714 602 780 707 0.11 Arab countries Kuwait 218 158 110 283 221.. Saudi Arabia 1 026 2 025 1 551 4 979 3 134.. United Arab Emirates 141 219 429 88 834 0.33 Other donors Chinese Taipei 483 513 514 435 411 0.13 Thailand.. 74 67 178 40 0.02 Other donors c 51 77 134 275 313.. TOTAL 3 175 4 617 4 333 8 094 6 672.. Source: OECD, Development Cooperation Report 2011.

USD million A Changing International Aid Architecture Emerging donors are becoming more active and attract more attention from the international world. 2000 Aid Volumes of BRICS in 2009 1500 1000 500 0 Brazil China India Russia South Africa Source: OECD, Development Cooperation Report 2011.

USD million A Changing International Aid Architecture Donors Gross ODA in 2009 35000 30000 25000 15000 10000 5000 0 United States France Germany United Kingdom Japan Spain Netherlands Sweden Norway Canada Italy Saudi Arabia Denmark Australia Belgium Switzerland China Finland Austria Ireland United Arab Emirates Korea Russia Turkey Greece Portugal Source: OECD, Development Cooperation Report 2011. India Luxembourg Chinese Taipei Poland New Zealand Kuwait Czech Republic Israel a b Hungary South Africa Slovak Republic Slovenia Thailand Iceland 20000

A Changing International Aid Architecture NGOs are playing a more important role in international development cooperation. 25 18 16 20 15 10 5 14 12 10 8 6 4 2 0 1998-1999 2005 2006 2007 2008 2009 0 Volume proportion

China s Foreign Aid Policies From Eight Principles to the First White Paper In 1964, Premier Zhou Enlai declared the Eight Principles of China s Foreign Aid. In April 2011, China released the first White Paper on China s Foreign Aid.

China s Foreign Aid Policies Unremittingly helping recipient countries build up their self-development capacity. Imposing no political conditions Adhering to equality, mutual benefit and common development Remaining realistic while striving for the best Keeping pace with the times and paying attention to reform and innovation

Features of China s Aid Practices Covering a wide range of countries, with Asia and Africa as the priority regions East Europe, 12 Asia, 30 Africa, 51 Latin America and the Caribbean, 18 Oceania, 12

Features of China s Aid Practices Focusing more on project aid Complete projects account for 40% of China s foreign aid expenditure. The majority of concessional loans are used to support project aid. In 2011, China assisted with 146 complete projects and 35 concessional loan projects.

Features of China s Aid Practices Focusing more on economic dimensions of cooperation Economic infrastructure, agriculture and industry projects account for over 60% of complete projects and over 80% of concessional loans projects. Focusing more on bilateral aid Around 90% of China s foreign aid is provided through bilateral channel.

Features of China s Aid Practices Combination of aid with trade and investment zero-tariff treatment to imported products from LDCs China-Africa Development Fund special loan for the development of SMEs in Africa establishment of trade and economic cooperation zones

Looking Forward of China s Foreign Aid Continue to increase aid budget Optimize aid structure Increase the proportion of grants in the total aid volume Provide more aid to least developed countries Build more livelihood-improving projects Continue to focus on agriculture and infrastructure Provide more human resource development cooperation

One Question To what extent will China/ emerging economies change the international development cooperation landscape?

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