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Working Paper 107 - China, Africa and the International Aid Architecture
07/05/2010 00:00
Working Paper 107 - China, Africa and the International Aid Architecture
Chinese engagement in Africa, while not new, has changed significantly in recent years. The rising global prominence of Chinese aid, export credits, and bank finance has aroused both enthusiasm and concern among those concerned with development. China’s newly prominent role as a donor and financier is taking place within a set of rules, norms, and sometimes competing institutions that make up what is known as the global aid architecture. Some believe that Chinese practices in official aid, preferential export credits, and other forms of development finance pose a significant challenge to the norms governing the international aid architecture. Others welcome the rise of a new development partner, one with seemingly deep pockets, and suggest that the Chinese might provide new leverage to countries that were faced with conditionality-based aid advocated by traditional donors. Yet despite the intense interest, debates over the impact of China as a donor and financier have largely taken place with very little information. &nbsp; This paper analyzes China’s growing foreign aid and export credit program as an element of the changing international aid architecture. The international aid architecture is defined as the institutions, norms, and practices that govern the transfer of concessional resources for development. It comprises four major areas: (1) Institutions and actors; (2) Volumes and composition; (4) Instruments and modalities; and (4) Rules and standards. &nbsp; The evidence suggests that Chinese finance will be a significant, continuing source of capital for African countries and countries that propose bankable projects will likely be able to access some of this finance, whether or not they have natural resources, but for the most part, it is not being made available as ODA. As for cooperation with other donors and financiers, so far, the Chinese have been reluctant to participate in established donor-led groups (such as the Paris Club, or the Consultative Groups) in part because they generally do not see aid from the West as having been very effective in reducing poverty in Africa.&nbsp; But there have been a number of cases of tripartite cooperation, including the South-South Cooperation Program run through the Food and Agriculture Organization’s Food Security Program.<br />Finally, building up local capacity to negotiate favorable natural resource deals with China Exim-bank and Chinese companies should also be a priority. In conclusion, we address three final issues. Can China compensate for what is likely to be a shrinking pool of finance from the OECD countries in the aftermath of the financial crisis? What efforts have been made to engage and work with China as a “rising donor” and how have they fared? Finally, how can African countries best position themselves to work with this significant partner country?Read more

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