China’s Foreign Aid: A Primer for Recipient Countries, Donors, and Aid Providers

[Deeq A.]

Since the 1950s, Chinese foreign aid has been influenced by and linked with China’s investment, trade, and foreign policy objectives. Partly as a result, it has also been fairly opaque. However, as Chinese aid (and loans) have increased in volume and significance, and as China’s economic status has improved, this opacity has become more challenging for recipient countries to manage. The creation of China’s International Development Cooperation Agency (CIDCA) in 2018 can be seen as a concerted move by China to allay these concerns by making a stronger commitment towards a clearer distinction among the various types of Chinese financial flows. However, it remains difficult for recipient countries to navigate the system.

This note aims to help recipient countries understand Chinese aid management and structures by provid-ing an overview of those structures and what they mean for the future of aid from China. The note takes into account two key shifts in Chinese aid management in recent years: the formation of CIDCA, and the Belt and Road Initiative (BRI). We hope this note will also be of interest to development practitioners seek-ing to better engage with China or to learn from China’s experience.

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