A Study of China’s Foreign Aid Also by Yasutami Shimoura AID AS HANDMAIDEN FOR THE DEVELOPMENT OF INSTITUTIONS: A New Comparative Perspective ( with Machiko Nissanke ) THE RISE OF ASIAN DONORS: Japan’s Impact on the Evolution of Emerging Donors ( with Jin Sato ) AID RELATIONSHIPS IN ASIA: Exploring Ownership in Japanese and Nordic Aid ( with Alf Jerve and Annette Hansen ) A Study of China’s Foreign Aid An Asian Perspective Edited by Yasutami Shimomura Professor Emeritus, Hosei University, Japan and Hideo Ohashi Professor of Development Economics and Asian Studies at Senshu University, Japan Editorial introduction and selection matter © Yasutami Shimomura and Hideo Ohashi 2013 Individual chapters © Contributors 2013 Softcover reprint of the hardcover 1st edition 2013 978-1-137-32376-7 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. 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Contents List of Illustrations vii Acknowledgements i x Notes on Contributors x List of Acronyms x ii Part I Introduction Why China’s Foreign Aid Matters? 3 Yasutami Shimomura and Hideo Ohashi Part II Basic Facts of a Rising Donor 1 The Foreign Aid Philosophy of a Rising Asian Power: A Southeast Asian View 19 Dennis D. Trinidad 2 Aid Volume in a Historical Perspective 46 Takaaki Kobayashi and Yasutami Shimomura 3 Implementation System: Tools and Institutions 58 Shino Watanabe 4 The Link between Aid and Non-Aid Activities: A Distinguishing Feature of China’s Engagement 82 Hideo Ohashi 5 Evaluating China’s ‘Quaternity’ Aid: The Case of Angola 104 Juichi Inada Part III Emphasis on’Aid, Investment, Trade Synthesis’: Evolution of an Asian Aid Model? 6 The Chinese View: Reflection of the Long-Term Experiences of Aid Receiving and Giving 125 Wang Ping 7 The Japanese View: With Particular Reference to the Shared Cognition Model in Asia 145 Yasutami Shimomura v vi Contents Part IV Impacts of China’s Foreign Aid 8 T he Impact of Economic Cooperation on Asian Countries: Focus on the Mekong Region and Central Asia 1 71 Naohiro Kitano 9 C hina’s Foreign Aid and International Aid Community: From the Perspectives of Traditional Donors and Africa 193 Izumi Ohno Part V Conclusion and Policy Implication 10 F uture Prospects of China’s Foreign Aid 2 19 Yasutami Shimomura and Hideo Ohashi Index 2 39 List of Illustrations Figures 1.1 The system of management of Chinese aid 3 3 1.2 DAC aid allotments in 2010–11 4 0 1.3 Chinese aid allotments in 2009 4 1 1.4 DAC donor aid by sector in 2011 4 1 2.1 Long term trend of China’s foreign aid 51 4.1 Chinese foreign economic cooperation 8 6 4.2 Chinese overseas workers’ compensation and remittance 9 6 5.1 The amount of trade between Angola and China, 2002–9 1 11 5.2 China’s investments in Angola, 2002–11 1 12 5.3 GDP and its growth rate in Angola 1 13 7.1 The East Asian model of development/aid: assistance to ‘graduation’ 1 53 7.2 Concerted activities between public and private sectors: the case of the Eastern Seaboard 1 60 7.3 Concerted activities between public and private sectors: the case of the Ha Noi-Hai Phong Corridor 1 61 8.1 China’s trade and economic relations with Mekong region and Central Asian countries (2010) 1 79 8 .2 China’s trade and economic relations with Mekong region and Central Asian countries (Percentage of GDP in 2010) 1 80 9.1 Two types of international development cooperation 2 02 Tables 1.1 The eight principles of Chinese aid 2 8 1.2 Milestones in China’s aid-giving 2 9 1.3 Aid from DAC donors and China 3 6 2.1 Estimation of the volume of China’s foreign aid 4 9 2.2 Resource flows to China: yearly average 5 4 3.1 Bilateral foreign aid of China and DAC donors 7 4 4.1 Flows of funds to developing countries 8 4 4.2 Chinese foreign economic cooperation by area and country 9 3 4.3 China’s service trade account balance 9 5 7.1 Japan’s share in the aid flows to ASEAN4 and China 1 50 vii viii List of Illustrations 8.1 China’s bilateral economic cooperation frameworks with Mekong region countries 174 8.2 China’s bilateral economic cooperation frameworks with Central Asia 178 8.3 Amounts committed by China for different regions 1 82 9.1 Comparison of Western and Chinese aid 1 95 9.2 Features of ODA: US, UK, Japan and South Korea 1 95 9.3 Topics discussed at the China-DAC study group 1 98 9.4 Suggestions in phase 1 of the China-DAC study group 1 99 9.5 Numerical targets announced at the Beijing summit and the Fourth Ministerial Conference of the FOCAC 2 05 9.6 Industrial development support by major donors in Ethiopia 209 Map 8.1 Cross-border infrastructure between China and the Mekong region and between China and Central Asia 1 72 Acknowledgements We have become indebted to many people during the process of producing this book, which originated from a research project organized by the Japan Institute of International Affairs (JIIA). We are thankful to Yoshiji Nogami, Naoko Saiki, and Hideki Asari for their valuable support. We would like to express our sincere gratitude to Seiichiro Takagi, Akio Takahara, Lin Xiaoguang, Kazuto Tsuji, Takashi Suzuki, Shinya Kadozaki, and Hiroshi Takazawa for their insight, constructive comments, and expertise throughout the research. An international workshop was organized by JIIA as a part of the project on 3 December 2011. The inter- action between Chinese and Japanese scholars on this occasion was very informative and productive. We are most grateful for the time and intellectual input provided by the Chinese participants Li Xiaoyung, Mao Xiaojing, Xue Hong, and Zhou Hong. Last but not least, we grate- fully acknowledge the superb professional assistance provided by Taiba Batool and Gemma Shields of Palgrave Macmillan during the prepara- tion of this volume. This volume is the product of a team effort, in which we have been very lucky to have had the chance to participate. The editors and authors are grateful to Nihon Keizai Hyoron-Sha, Tokyo, Japan and Routledge, London, U.K., for permission to repro- duce parts of previously published materials. Chapters of this volume, except Chapter 1, are based on, with permission, Yasutami Shimomura and Hideo Ohashi with The Japan Institute of International Affairs (eds), C hugoku no Taigai Enjo (China’s Foreign Aid) , Tokyo, Nihon Keizai Hyoronsha, 2013. Parts of Chapters 3, 6, and 7 are reproduced with permission from Chapters 6 and 7 of Jin Sato and Yasutami Shimomura (eds), T he Rise of Asian Donors Japan’s Impact on the Evolution of Emerging Donors , London, Routledge, 2013. ix