This paper analyses China’s aid policy and strategy, and studies its aid implementation in practice with focus on organizational structure, aid modality as well as the volume of its assistance. To better understand the characteristics of Chinese aid, this paper first reviews the evolution of China’s position as a donor and recipient over the past 60 years and then explores the ‘Beijing Consensus’ in comparison to the ‘Washington Consensus’ as a new development paradigm.
The growing trend is that emerging donors from the developing world have stronger influence in international aid architecture more than ever with its increasing volume of assistance and the unconventional way of aid delivery. China, as one of the world’s fastest growing economies, is exercising its soft power as a diplomatic tactic and economic tool to secure natural resources overseas and export markets in developing countries. The fundamental direction of Chinese aid policy is based on national value of mutual benefits, non-interference, no conditionality and self-help development that have been sustained since the 1960s. The current form of Chinese aid relying strongly on preferential loans combined with economic cooperation package originated in 1994 when the Chinese Exim bank was established.
It should be carefully examined that the perception towards Chinese aid is polarized among traditional donor societies. On the positive side, China contributes to the overall volume of global aid and fills the serious financial gap in developing countries. The Chinese aid model is also interpreted as an alternative development paradigm with an emphasis on the government’s role in introducing the market economy. Yet there are opinions in opposition, expressing concerns over non-conformity of China’s independent aid practices with international guidelines set and agreed by OECD DAC donors. The most common criticism is around its non-conditionality and the high proportion of tied loans.
As Korea is poised to strengthen cooperation with other emerging donors and diversify its aid modality though South-South Cooperation and Triangular Cooperation, it is important to have a balanced perspective on Chinese aid and search for effective strategies to work with China. This paper suggests in its conclusion the possibility of joint projects and sharing of development experience in Asia and Africa region.