New Actors in International Development: the Case of China

Dr. He Wenping

Professor, Director of African Studies Section of Institute of West Asian & African Studies, Chinese Academy of Social Sciences

OutlineFrom old to new ActorMajor Characteristics of Chinas Aid ApproachesThe Role and ChallengesPost-Busan: Chinas Contribution

From old to new Actor

China: not a new donor

period: from 1956 to the late 1970s Motive and driving forces: ----rich ideology and political benefits ----strengthen the diplomatic and political ties ----break through the strategic besiege ----against imperialism and colonialism and for national liberation and independence

Manifestation: support the struggle for national independence and against imperialism and colonialism Premier Zhou Enlais visits to Africa and put forward the eight principles TaZara Railway Building

The biggest Chinese aid project to Africa, the Tan-Zam Railway,began to be built in mid 1960s and completed in 1975

The eight principles

equality and mutual benefit

2. strictly respects the sovereignty of recipient countries, no strings attached and no privilege required

3. provides economic aids in the way of interest-free or low-interest loan, the time limit of repayment could be delayed when it is needed

4.The purpose of aid is to help recipient countries gradually develop on the track of self-reliance and economic development independently

5. To make quick effects through small investment for the projects with aid

6. provides the best quality equipment and material of its own manufacture at international market prices.

7. While providing technical assistance, Chinese government assures to teach recipients to fully master this kind of technology

8. Chinese aid experts should be paid as same as their own experts of recipient countries. They are required to not have any special requirement or enjoy any special amenities.

Second period: from the late 1970s to now

----the aim is to seek mutual economic cooperation and common development. ----the four principles raised in early 1983

equality and mutual benefit, stress on practical results, diversity in forms, pursuit of common progress

Results:

Diversity in forms of aidApart from providing grant (the main form of previous period), investment, cooperative and joint ventures, engineering contract business, etc, are all appeared

Economic and trade relations has been improved

The reforming foreign aid in October 1995preferential loan has been introduced ---mostly used for joint ventures by Chinese and local enterprises, ---for providing complete sets of equipments or mechanical and electrical products made in China ---for some infrastructure and social welfare projects which have guaranteed repayment of the loan (so far there are hundreds projects under the framework of the preferential loans, the first preferential loan project was the oil exploitation program in Sudan in 1996)

with the founding of FOCAC in 2000, the contents of Chinas aid to Africa have been further widened and enriched.

Apart from providing complete set of projects which was the main form in 1990s (above 60%), technical cooperation, debt write-off, cooperation on human resources development, medical teams and youth volunteers dispatching, emergency humanitarian aid are all contributed to the all aid package program.

The Third Forum: Beijing 2006 SummitEight measures have been announced:Double assistance by 2009Provide loans and credits totaling US$ 5 billion Set-up a Development Fund which will reach US$5 billion to encourage Chinese Companies investmentBuild a conference centre for the AUDebt CancelFurther Open up Chinas Market to African commodities (from previous 190 to 440 items)Establish 3-5 Trade & Economic Cooperation ZonesTrain 15,ooo African Professionals, build 100 rural schools, dispatch 100 agriculture experts and 300 youth volunteers, build 30 hospitals and 30 malaria treatment centres, increase scholarships for African students from 2000 to 4000 per year,etc

The 2006 FOCAC Summit Opening Ceremony

The Fourth Forum: 2009 SHARM EL-SHEIKH, Egypt Ministerial Conference

New Eight measures have been announced:addressing climate change, to build 100 clean energy projects for Africa covering solar power, bio-gas and small hydro-power . cooperation in science and technology, will carry out 100 joint demonstration projects with Africa on scientific and technological research and receive 100 African postdoctoral fellows to conduct scientific research in China Help Africa build up financing capacityprovide $10 billion concessional loans, set up a special loan of $1 billion for small- and medium-sized African businesses, cancel African countries debts due to mature by the end of 2009

Further open up Chinas market to African products. China would phase in zero-tariff treatment to 95 percent of the products from the least developed African countries having diplomatic relations with China, starting with 60 percent of the products within 2010.Enhance cooperation with Africa in agriculture. increase the number of agricultural technology demonstration centers in Africa to 20, send 50 agricultural technology teams to Africa and train 2,000 agricultural technology personnel for Africa.Deepen cooperation in medical care and health. China would provide medical equipment and anti-malaria materials worth 500 million yuan ($73.2 million) to the 30 hospitals and 30 malaria prevention and treatment centers built by China and train 3,000 doctors and nurses for Africa.

Enhance cooperation in human resources development and education. China would build 50 schools and train 1,500 school principals and teachers for African countries. By 2012, China would increase the number of Chinese government scholarships to Africa to 5,500, and would also train 20,000 professionals for Africa over the next three years.Expand people-to-people and cultural exchanges. China proposes to launch a China-Africa joint research and exchange program to increase exchanges and cooperation, share development experience, and provide intellectual support for formulating better cooperation policies by the two sides

CharacteristicsNo political strings attached Aid policyEmphasizing on bilateral aid projects rather than multilateral system The reasons:historical habit and enriched experience in doing so; poor help poor model doesnt belong to the DAC club; bilateral way is more efficient than the multilateral way; AU and NEPAD are relatively new initiatives and African integration is still in the process of building.

3. Strong focus on hardware projects such as physical infrastructure construction rather than software projects like research and capacity building

The China Export-Import Bank, founded in 1994, has played an important role in providing financial support for such infrastructure projects.

Chinese financial commitments is rising dramatically: $1 billion (2001-03 )-- $1.5 billion(2004-05)-- $7 billion in 2006 -- $4.5 billion in 2007(the year that China provided finance for as much infrastructure in Africa as all the G8 countries added together)

The Role of Chinas Aid on African Developmentgenerated effective results and contributed greatly to Africas economic recovery ---- more than 900 projects ---- debts write-off ----medical teams dispatching and human resources training annual growth rate between 5% and 6% rapid price rise of raw materials, demanding from Asia promoted the bilateral trade dramatically huge investment in infrastructure high efficiency

Chinas trade with Africa in total (billion)

Addis Ababa Ring Road constructed by a Chinese company

The Role of Chinas Aid on International concern on Africa

the appearance of Africa fever

Korea-Africa Summit , EU-Africa Summit , India-Africa Summit, etc.

heated debate about forming African strategy goes on in Africa

Challenges and Developing Trend ----conflict between Chinas no strings attach model and the Western donors aid conditionality (a two-way street mindset and practice are needed ) ----Chinas aid managing system needs to be upgraded: an independent agency needed ----an urgent need to train the expertise on foreign aid ----The need to establish a monitoring system and mechanism to evaluate Chinas aid

Post-Busan: Chinas Contribution

Discourse shift: from aid effectiveness to development effectiveness Paris Declaration in 2005 Accra Agenda for Action in 2008 Busan in 2011 5 principles: ownershipalignment , harmonisation, management for results , mutual accountability

Why the Shift Happens Now: the Background of International Situation:

The convergence of the MDGs poverty reduction agenda and the G20 agenda could be seen as the most important driving force for the shift. The appearance of the new donors and their focus on development issue The failure of Western countries' development assistance

What Chinas Experiences can Contribute to the discourse Evolution?

China has a dual role and a great potential for becoming a driver of the aid discourse evolution, namely from aid effectiveness to development effectiveness

---- long being a largest recipient country(know how to engage with donors and build ownership by its own) ---- being a new donor/or call aid-provider(accumulating experience through learning by doing and focusing on aid results

Chinas experiences being a recipient country: from self-reliance to welcome foreign aid. by the end of 2007, over US$ 6.6 billion aid landed in China. The positive role given by the influx of aid

Experiences: combined efforts between donors and China, the predominant role played by Chinese government.

Particularly do good job about the principle of ownership and alignment: integrate foreign aid with Five Year Plan; set three criteria for aid project application

Chinas experiences for its own economic, political and social development

thirty years ago, Malawi, Burundi and Burkina Faso were economically ahead of China on a per capita basis. poverty-alleviation and economic development could be achieved in the developing countries Chinas experience has become the focus of the world and an example for others Chinas economic success has been achieved together with political and social reform rightly handled the relations between reform, development and stabilitya powerful, visionable leadership and the right development strategy are very much needed

Chinas experiences being a provider of development assistance country

not a new donor, TaZara Railway.the core value of equality, mutual respect and mutual benefit

Thank you !