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Introduction: The Nature and Scope of China’s Foreign Aid and Investment Diplomacy

  • John F. Copper

Abstract

Foreign aid and foreign investments are both complex and controversial subjects. Even defining these terms has evoked intense debates and, at times, heated disagreements. There are good reasons for this: The terms have been used to mean different, sometimes contradictory, things. They reflect divisive views of economic and political policies. They connote moral behavior and are often used for propaganda purposes. They are instruments of power and influence. They mirror a nation’s status in the world.1

Keywords

Foreign Investment Recipient Country Chinese Leader Communist Country Foreign Assistance 
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Notes

  1. 2.
    Peter Stephenson, Handbook of World Development: The Guide to Brandt Report (New York: Holmes and Meier Publishers, 1981), p. 6. More specifically aid refers to help given to developing countries, defined as those with a per capita income below a certain level, or funds given to multinational institutions such as the UN Development Program or the World Bank. Export credits are usually defined as foreign aid by the OECD.Google Scholar
  2. 3.
    See Stephen Browne, Aid and Influence: Do Donors Help or Hinder? (London: Earthscan, 2007), pp. 12–13. The author also discusses such terms as “recipient,” “development,” “nonmilitary,” “concessional,” and “overheads.”Google Scholar
  3. For a discussion of the purposes of foreign aid and also debt forgiveness or relief, see Carol Lancaster, Foreign Aid: Diplomacy, Development, Domestic Politics (Chicago, IL: University of Chicago Press, 2007), pp. 12–18 and p. 57. After the Jubilee 2000 campaign and the World Bank encouraging aid giving countries to cancel debts owed by developing countries, debt relief came to be considered as “aid” and was so categorized in many cases.Google Scholar
  4. 4.
    See John Alexander White, The Politics of Foreign Aid (New York: St. Martins, 1974).Google Scholar
  5. 5.
    Lawrence Siring, Jack Plano, and Roy Olton, International Relations: A Political Dictionary (Santa Barbara, CA: ABC-CLIO Publishing, 1995), p. 139.Google Scholar
  6. 8.
    For a discussion of the different types of aid, see Jacob J. Kaplan, The Challenge of Foreign Aid (New York: Praeger, 1967), chapter 13.Google Scholar
  7. 9.
    See Eugene W. Castle, The Great Giveaway: The Reality of Foreign Aid (Chicago, IL: Henry Regnery, 1957). The author notes that in the United States a significant amount of money and effort is made to “propagandize” foreign aid. See Volume 3, Chapter 1. On the other hand, opinion surveys show there is little public understanding of foreign aid. This works to the advantage of interest groups that favor aid giving.Google Scholar
  8. See David A. Baldwin, Foreign Aid and American Foreign Policy: A Documentary Analysis (New York: Praeger, 1966), pp. 4–5.Google Scholar
  9. 12.
    John D. Montgomery, Foreign Aid in International Politics (Englewood Cliffs, NJ: Prentice Hall, 1967), p. 34.Google Scholar
  10. 15.
    For discussion on this point, see George Liska, The New Statecraft: Foreign Aid in American Foreign Policy (Chicago: University of Chicago Press, 1960), p. 6. The original argument comes from Lenin’s Imperialism: The Highest Stage of Capitalism.Google Scholar
  11. Also see Judith Hart, Aid and Liberation: A Socialist Study of Aid Policies (London: Victor Gollangz, 1973), chapters 8 and 9.Google Scholar
  12. 16.
    There is a visible tendency for nations that lack natural resources to try to gain guaranteed sources. Japan is a case in point. See Robert M. Orr Jr. and Bruce M. Koppel, “A Donor of Consequence: Japan as a Foreign Aid Power,” in Bruce M. Koppel and Robert M. Orr Jr. (eds.), Japan’s Foreign Aid: Power and Policy in a New Era (Boulder, CO: Westview Press, 1993), p. 2.Google Scholar
  13. 17.
    See Teresa Hayter, Aid as Imperialism (New York: Pelican, 1971).Google Scholar
  14. 18.
    Rostow argues that economic development occurs in stages and that aid can be essential in helping a developing country move from one stage to another. See W. W. Rostow, The Stages of Economic Growth: A Non-Communist Manifesto (London: Cambridge University Press, 1960).Google Scholar
  15. 19.
    Lloyd D. Black, The Strategy of Foreign Aid (Princeton, NJ: D. Van Nostrand, 1968), pp. 14–15.Google Scholar
  16. 22.
    The United States moved to giving more tied aid due to a balance of payments problem in the 1960s. See Robert E. Asher, Development Assistance in the Seventies: Alternatives for the United States (Washington, DC: Brookings, 1970), p. 200.Google Scholar
  17. 25.
    See Denis Goulet and Michael Hudson, The Myth of Aid (Maryknoll, NY: Orbis Books, 1971), p. 106, 117 and 258–59. The authors note that World Bank and International Monetary Fund are status quo oriented and thus discourage institutional change. They also note that much international institution aid is tied aid, generally to improve governance, the rule of law, and human rights.Google Scholar
  18. 26.
    This has been the case of most Communist nations’ aid not only because they did not want to forsake the political influence that aid provided, but also because they gave foreign aid largely for ideological reasons. For details, see Kurt Muller, The Foreign Aid Programs of the Soviet Bloc and Communist China: An Analysis (New York: Walker and Company, 1964).Google Scholar
  19. 27.
    Some writers, in fact, prefer the term “security assistance” to include both economic and military assistance. In the case of the United States, when aid proposals are made in Congress, security is generally used as justification. See Max F. Millikan, “The Political Case for Economic Development Aid,” in Robert A. Goldwin (ed.), Why Foreign Aid? (Chicago, IL: Rand McNally, 1962), pp. 90–91. It is worth mentioning here, given that this book is about China’s aid, that US aid to Taiwan from 1950 to the mid-1960s was given largely in the form of military aid—around 60 percent—and Taiwan was one of the big success stories of American aid producing economic growth and democracy.Google Scholar
  20. See H.Y. Wen, Behind Taiwan’s Economic Miracle: A Political and Economic Analysis of the US Aid Experience in Taiwan (Taipei: Tsu-Li Wan-Pao, 1990).Google Scholar
  21. 33.
    Landrum R. Bolling, with Craig Smith, Private Foreign Aid: U. S. Philanthropy for Relief and Development (Boulder, CO: Westview Press, 1982).Google Scholar
  22. 34.
    For a definition of technical aid, see Maurice Domergue, Technical Assistance: Theory, Practice and Policies (New York: Praeger, 1968), p. 5.Google Scholar
  23. 36.
    See Lauchlin Currie, The Role of Advisors in Developing Countries (Westport, CT: Greenwood. 1981). pp. 4–5.Google Scholar
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    Tatuyana P. Soubbotina and Katherine A. Sheram, Beyond Economic Growth: An Introduction to Sustainable Development (Washington, DC: The World Bank, 2004), chapter 13.CrossRefGoogle Scholar
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    Shino Watanabe, “China’s Foreign Aid,” in Hyo-sook Kim and David M. Potter (eds.), Foreign Aid Competition in Northeast Asia (Sterling, VA: Kumarian Press, 2012), p. 61.Google Scholar
  26. 55.
    Probably most of China’s military aid was delivered. See John F. Copper, “China’s Military Assistance,” in John F. Copper and Daniel S. Papp (eds.), Communist Nations’ Military Assistance (Boulder, CO: Westview Press, 1983), pp, 96–134. China’s arms aid to non-Communist countries was usually quite visible. It was less so to Communist countries.Google Scholar
  27. 56.
    See Peter Van Ness, Revolution and Chinese Foreign Policy: Peking’s Support for Wars of National Liberation (Berkeley: University of California Press, 1970), p. 164. The author notes that many of the biggest recipients of US aid were China’s “targets of revolution.” China also made aid commitments to nations where there was no liberation struggle apparent but the nations were unstable and/or where the leadership or the politics in those countries often changed quickly and dramatically.Google Scholar
  28. 59.
    See, for example, Bruce Vaugh, Thomas Lum, and Wayne Morrison, “Southeast Asia,” in China’s Foreign Policy and “Soft Power” in South America, Asia, and Africa (Washington, DC: U.S. Government Printing Office, 2008), p. 97. China not delivering promised aid is mentioned on a number of occasions in subsequent chapters.Google Scholar
  29. 60.
    One author calculates that of the aid China gave from 1956 to 1973, 47 percent was not used as of December 1973. See Wolfgang Bartke, China’s Economic Aid (New York: Holmes and Meier, 1975), pp. 10–11.Google Scholar
  30. For an alternative view on this matter, see Janos Horvath, Chinese Technology Transfer to the Third World: A Grants Economy Analysis (New York: Praeger, 1976), pp. 22–23.Google Scholar
  31. Horvath states that delays between China’s aid commitments and deliveries are considerable, but this does not matter, or should not be seen as a major issue, as repayment of Chinese loans is also delayed. Also see Sidney Klein, Politics versus Economics: The Foreign Trade and Aid Policies of China (Hong Kong: International Studies Group, 1968), p. 16. The author notes that it took China four years to build a cement factory in Cambodia and that aid to a number of other countries was not disbursed on schedule. It is also worth noting that China suffered from serious economic dislocation and a drop in the gross national product after the Great Leap Forward launched in 1958 and economic and political disruption as a result of the Cultural Revolution that started in 1966. Both had impacts for several years.Google Scholar
  32. 68.
    See Tseng Yun, “How China Carries out the Policy of Self-Reliance,” in Weinberg Chai (ed.), The Foreign Relations of the People’s Republic of China (New York: Putnam, 1971), pp. 226–31. One author, however, suggests that China promoted self-reliance so that these countries could become closer to China.Google Scholar
  33. See Garon Hydlen and Rwekaza Mukandala (ed.), Agencies in Foreign Aid: Comparing China, Sweden and the United States (New York: St. Martin’s Press, 1999), p. 157.Google Scholar
  34. 74.
    See Carol H. Fogarty, “China’s Economic Relations with the Third World,” in China: A Reassessment of the Economy (Washington, DC: Government Printing Office, 1975), p. 732. The Joint Economic Committee of the US Congress undertook this study. The author in this study compares China’s economic aid to poor countries with the aid given by other Communist countries. This author believes that by including China’s military aid to North Korea, North Vietnam, and Albania and given the risk factor in China’s aid (meaning the considerable instability in recipient countries and their difficulties in repayment) the picture is different. This point will be discussed further in following pages.Google Scholar
  35. 75.
    See Vivian Foster, William Butterfield, Chuan Chen, and Nataliya Pushak, Building Bridges: China’s Growing Role as Infrastructure Financier for Africa (Washington, DC: World Bank, 2008), pp. 47–48.Google Scholar
  36. 76.
    One author notes that China was “not only the poorest country in the world to provide aid, but its aid was the highest ever given as a percentage of the donor country’s per capital income … and … often went to countries with a standard of living much higher than itself.” See Jung Chang and Jon Halliday, Mao: the Unknown Story (New York: Alfred A. Knopf, 2005), p. 461. Also see Copper, China Foreign Aid, pp. 2–4 for further discussion of this matter.Google Scholar
  37. 77.
    Shuaihua Cheng, Ting Fang, and Hui-ting Lien, “China’s International Aid Policy and Its Implications for Global Governance,” RCCPVB Working Paper (Research Center for Chinese Politics and Business, Indiana University), June 2012.Google Scholar
  38. 80.
    A few writers, however, observed that China, like other aid-giving countries, gives aid mainly to attain political objectives. See A. Doak Barnett, Communist China and Asia: A Challenge to the United States (New York: Vintage Books, 1960), p. 244.Google Scholar
  39. 83.
    Jianwei Wang, “China’s New Frontier Diplomacy,” in Sujian Guo and Jean-Marc F. Blanchard (eds.), “Harmonious World” and China’s New Foreign Policy (Lanham, MD: Lexington Books, 2008), p. 32. The author uses the term “debt” rather than aid though.Google Scholar
  40. 94.
    Carol Fogarty, “Chinese Relations with the Third World,” in Chinese Economy Post-Mao (Washington, DC: Joint Economic Committee of Congress, 1978), pp. 851–59.Google Scholar
  41. 101.
    See Lawrance , China’s Foreign Relations since 1949, p. 153 for phase two aid.Google Scholar
  42. Also see Gregory T. Chin and B. Michael Frolic, Emerging Donors in International Development Assistance: The China Case, International Development Research Centre (Canada), December 2007, p. 2.Google Scholar
  43. 108.
    Zhang Haibing, “China’s Aid to Southeast Asia,” in Saw Swee-Hock (ed.), ASEAN-China Economic Relations (Singapore: Institute of Southeast Asian Studies, 2007), p. 257.Google Scholar
  44. 110.
    See Yong Deng, “Conception of National Interests: Realpolitik, Liberal Dilemma, and the Possibility of Change,” in Yong Deng and Fei-ling Wang (eds.), In the Eyes of the Dragon: China Views the World (Lanham, MD: Rowman and Littlefield, 1999), pp. 47–72; Thomas J. Christensen, “Chinese Realpolitik,” Foreign Affairs, September/October 1996, pp. 37–52.Google Scholar
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    See Zhimin Lin, “China’s Third World Policy,” in Yufan Hao and Guiyang Huan (eds.), The Chinese View of the World (New York: Pantheon Books, 1989), p. 243.Google Scholar
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    Anne Gils and Gerald Segal, China and the Arms Trade (New York: St. Martin’s Press, 1985), p. 27.Google Scholar
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    Vivien Foster, William Butterfield, Chuan Chen, and Nataliya Pushak, Building Bridges: China’s Growing Role as Infrastructure Financier for Sub-Saharan Africa (Washington, DC: The World Bank, 2009), p. xvii and p. 7. China’s investments are more concessional than private investments by a considerable amount, but do not meet the 35 percent (initially and not factoring in debt forgiveness) that Western official investments carry.CrossRefGoogle Scholar
  48. 154.
    Carol Lancaster, “Foreign Aid in the Twenty-First Century: What Purposes?” in Louis A. Picard, Robert Groelsema, and Terry F. Buss (eds.), Foreign Aid and Foreign Policy: Lessons for the Next Half Century (Armonk, NY: M.E. Sharpe, 2008), p. 39.Google Scholar
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    Joshua Kurlantzick, Charm Offensive: How China’s Soft Power Is Transforming the World (New Haven, CT: Yale University Press, 2007), p. 98.Google Scholar
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    Hideo Hash, “China’s Regional Trade and Investment Profile,” in David Shambaugh (ed.), Power Shift: China and Asia’s New Dynamics (Berkeley: University of California Press, 2005), p. 87. The author cites several sources, both UN and Chinese government publications.Google Scholar
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    Anne Gilks and Gerald Segal, China and the Arms Trade (New York: St. Martin’s Press, 1985), p. 29.Google Scholar

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© John F. Copper 2016

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