On Aid-thoughts blog,  Ranil Dissanayake presents a compelling argument in favor of, what he calls, ‘the second-generation donors’. That is: those not belonging to the ‘first-generation donors’, centering around Europe and America. Notable members of this group, ‘the second-generation donors’, are South Korea, India, China and Brazil.

The two groups have follow different approaches in their development cooperation. And, this is the source of criticism against ‘the second-generation donors’, specifically, on China. Ranil Dissanayake summarizes the criticisms as follows:

Generally, Chinese aid to Africa draws three major critiques from the first-generation donors. These are:

• China’s aid is too unconditional – they do not penalize poorly or repressively governed countries and do not require the same standards of fiscal and economic management prior to undertaking massive aid projects.
• Their self-interest is too great an influence on their aid – they focus too much on providing business to Chinese firms and in extracting resources for Chinese use, rather than the unalloyed betterment of the aid-recipient country.
• They are far too opaque a donor – they do not provide sufficient information on the volume, distribution and modes of disbursement of their aid. This raises worries that their aid is not very user-friendly. China, for example, does not appear in AidData’s data set as a donor.

Nonetheless, Ranil Dissanayake refutes the criticisms one by one.

The criticism that China gives out loans without factoring in human rights and economic management record of the Governments is unjustified. Why? Ranil Dissanayake states ‘[This criticism] is immensely hypocritical. I do not understand how Jeffrey Sachs gets to thank Meles Zenawi in his book and first-generation donors get to so much money into their Millennium Village Project, but China can be criticized for building roads there. Yes, Ethiopia’s governance leaves much to be desired, but building roads there is as obvious a win for a country with high internal transportation costs as running a bed-nets campaign. Of course, other donors can argue that they advocate for better governance alongside provision of support, but to my mind this is simply another reason for new donors not to replicate these efforts’. Moreover, he observed China turning down financial requests by African countries to projects that made no sense or was too politicized. He cites an instance in an country, where the President wanted to build a University on his private land using a Chinese loan but refused.

With regard to the critique that Chinese aid is ‘self-interested’, he agrees that the Chinese build roads so as to get access to natural resources, though this is not the motive behind all their projects. In fact, it is ‘the second-generation donors’ that started the practice of tied-aid, economic assistance given on the condition that it is spent on products of the donor country. Though most donors have technically untied aid, he sarcastically notes, ‘it’s still striking how often contracts funded by a bilateral donor go to firms from that donor’s country.’ He asks: If China is extracting resources in exchange for cut-price road building projects, how does Europe have the moral high ground when it supports agricultural development on the one hand and the Common Agricultural Policy on the other? Or when the first-developed nations continue to impose a global trading regime which they know limits the possibilities for African countries to develop local industry with a measure of protection?

However, he seems to share the thirds criticism. He observed, in two countries where he worked, information on Chinese agreements were inaccessible, despite his working in a relevant department. Loan agreements can be found, but in-depth M&E and centrally collected information on the extent and distribution of support was much scarcer. Thus, he concludes, when these projects run into problems, it can be much harder to see why these problems have arisen and what can be done about them.

You are encouraged to read the full text – Wrong About China

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Ranil Dissanayake is a hybrid creature: part economist and part historian. He specialises in aid effectiveness, having advised the Government of Malawi in this field for almost four years before taking a similar post in Zanzibar. He has also advised Governments and undertaken research in the murky realms of aid information management. His current post is funded by the UNDP, but the views expressed in this blog are solely his, and should not be taken to represent the United Nations in any way.[this bio is from Aid-thoughts blog]