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China does not have strict official development assistance (ODA) figures, although it has a long history of foreign aid (since the 1950s) that shares many common elements with the ODA standard.  China implements a more flexible and broader foreign aid practice than is normally within the scope of ODA.  Grants, interest-free loans, and concessional loans are the financial mechanisms for China’s eight types of foreign aid, and these are allocated within the national budget and capital raised by the state-owned Export-Import Bank of China from the market.

China’s foreign aid policy is based on the Eight Principles of Economic Aid and Technical Assistance to Other Countries and the framework of South-South Cooperation.  The Chinese government has declared that its foreign aid is provided with no political attachment and with the purpose of seeking mutual cooperation and benefit.  The largest proportion of Chinese aid flows to African countries.

The Ministry of Commerce is the lead authority in administering and supervising China’s foreign aid activities in accordance with applicable laws and regulations.  The Ministry of Finance is responsible for formulating the budget allocation relating to foreign aid programs upon receiving proposals from competent departments under the State Council.  The Export-Import Bank administers and oversees concessional loans, which are provided at preferential interest rates.

Bilateral channels are still the cornerstone of China’s foreign aid, although a rapid expansion to international platforms is currently underway.  China’s private donations at the civil level are limited and are often a portion of government projects.

I.  Introduction

A.  Official Development Assistance Figures

The Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) adopted the concept of Official Development Assistance (ODA) in 1969 to standardize the measurement of the resource flows from DAC member states to developing countries.[1]  ODA is referred to as flows of concessional financing with a grant element of at least 25%, and are provided by official sectors with the primary objectives of promoting the aid recipients’ economic development and public welfare.[2]  China is a DAC-list ODA recipient and beneficiary; however, it has experienced soaring economic growth during the past two decades and has thus enabled itself, as an emerging development assistance contributor, to meet the development commitment it made under the United Nations Millennium Declaration (UNMD).[3]

Although China has undertaken extensive development assistance programs relating to other developing countries since 1950, the Chinese government has never reported official ODA statistics to the public; not only because it is a non-DAC state, but also due to the gap between the ODA standard and China’s notion of development assistance.

On April 11, 2011, the State Council of China published its first White Paper on China’s Foreign Aid (White Paper), which merged official development assistance into the undefined term “foreign aid”.[4]  The report declared China’s aggregate financial flow to foreign aid by the end of 2009 for the nearly sixty years prior as amounting to a total of RMB256.29 billion (approximately US$37.68 billion), including RMB106.2 (approximately US$16.89 billion) in grants, RMB76.54 billion (approximately US$12.17 billion) in interest-free loans, and RMB73.55 billion (approximately US$16.89 billion) in concessional loans.[5]  These figures should not be taken as equivalents to aggregate ODA statistics for the reasons that follow.

First, concessional loans are primarily raised by the Export-Import Bank of China (EIBC) from the market; the central government only subsidizes the interest gap arising from the difference between the concessional interest rate (usually between 2% to 3%) and the national benchmark interest rate.[6]  Thus, whether China is able to meet the ODA ratio standard of “at least 25% grants” is in question, as illustrated by the commentary below:

“For example, if [EIBC] gave out $100 million in a concessional loan with an interest rate of 2 percent, and the central bank lending rate was 6 percent, the annual subsidy would be 4 percent, or only $4 million. So a $100 million concessional aid loan given in 2009 ‘costs’ the foreign aid budget only $4 million that year.”[7]

Second, China permits aid for the purpose of military assistance in recipient states and aid that includes commercial purposes to benefit entities in the Chinese private sector.  These forms of aid are generally not reportable as ODA.[8]

Third, the Chinese government has run counter to the ODA purpose of generating primary benefits for the aid recipients by directing China’s foreign aid in a manner that supports reciprocity and mutual benefit.  A number of researchers have asserted that China’s foreign aid is more like a diplomatic and strategic tool to increase political influence and boost domestic economic development.[9]

Until the Chinese government explains these inconsistencies with the definition of ODA and interprets its methodology for measuring resource flows, the quantification of foreign aid provided by the Chinese government does not qualify as a report of ODA, although it shares some characteristics in common with ODA.

Although the White Paper does not include annual aid data, the central government in fact releases expenditures for foreign aid in the annual budget and final account reports.  For example, the Ministry of Finance (MOF) reported a total of RMB14.411 billion (approximately US$2.99 billion, equating to 0.39% of 2010 Gross National Income (GNI)) of Chinese foreign aid expenditure in 2010; however, this is not reportable as an ODA figure due to the lack of transparency concerning its components, as noted above.[10]

B.  Private Contribution Figures

The Chinese government leads the management of foreign aid projects and programs.  Private donations to foreign countries are generally concentrated in humanitarian aid provided through legally formed institutions, mainly the Red Cross Society of China (RCSC), whose administration and operation are subject to the supervision of the government and to the Law of the Red Cross Society of the People’s Republic of China promulgated by the Standing Committee of the National People’s Congress (NPC).[11]  The RCSC reported humanitarian aid in the 2011 Financial Balance Report as follows:

  • (1)  The RCSC received donations from organizations and individuals at home and abroad equivalent to RMB558.48 million (approximately US$88.23 million), RMB79.41 million (approximately US$12.54 million) of which was designated by the donors to aid Japan’s recovery from the earthquake and tsunami.
  • (2)  The RCSC donated RMB88.86 million (approximately US$14.04 million) for the purpose of foreign aid by donating
  • RMB72.08 million (approximately US$11.39 million) to the Japanese Red Cross for earthquake and tsunami rescue work;
  • RMB10.2 million (approximately US$1.61 million) to Kenya, Somalia, and Ethiopia for fighting drought and famine;
  • RMB300 million (approximately US$47.4 million) to Pakistan for recovering from floods; and
  • RMB3.58 million (approximately US$0.57 million) to Haiti and Chile for earthquake and tsunami rescue work, as well as aftermath recovery.[12]

C.  Snapshot of Foreign Aid Activity

1.  Development of China’s Foreign Aid System

China initiated foreign assistance in 1950 by providing materials to neighboring socialist countries and soon extended this to other developing countries in Asia and Africa following the Bandung Conference in 1955.[13]  Foreign aid expenditure was first categorized in the national budget for the approval of the NPC as early as 1958 and soared by 118% in 1959, accounting for 1.2% of the total national budget, without defining “foreign aid” or indicating its scope.[14]

In 1964, then Prime Minister Zhou En’lai on behalf of the Chinese government declared the Eight Principles for Economic Aid and Technical Assistance to Other Countries (Eight Principles) during an official tour to Africa, highlighting that China’s foreign aid policy is based upon equality, mutual benefit, no strings attached, respect for sovereignty, and no requests for privileges.[15]

After China resumed its legal seat in the United Nations (UN) in 1971, its foreign aid spread to infrastructure projects, for example, assisting in the construction of the Tanzania-Zambia Railway.[16]  Since 1978, along with adopting the policy of Reform and Opening-up, China gradually transferred its unilateral supply of aid to mutual cooperation, including managing projects on behalf of the recipient states, lease management, and joint ventures.[17]  Currently, China provides eight forms of foreign aid: complete projects, goods and materials, technical cooperation, human resource development cooperation, medical teams, emergency humanitarian aid, debt relief, and an overseas volunteer program.[18]

2.  Financing Source

At the beginning of the 1990s, in accordance with the gradual transformation of its previously planned economy into a socialist market economy, China diversified the sources and means of funding for foreign aid.  In addition to grants and interest-free loans provided by state finance through a unified government budget system, concessional loans are mainly invested by the Export-Import Bank of China (EIBC) with market capital.[19]

3.  International Cooperation

Although China has traditionally provided foreign assistance through bilateral agreements, it has greatly enhanced dialogue, cooperation, and assistance through multinational platforms since 2000, including the following:

  • Forum on China-Africa Cooperation (FOCAC)
  • UN High-Level Meeting on Financing for Development
  • UN High-Level Meeting on the Millennium Development Goals
  • Forum on China-Africa Cooperation
  • Shanghai Cooperation Organization
  • China-ASEAN Leaders Meeting
  • China-Caribbean Economic and Trade Cooperation Forum
  • China-Pacific Island Countries Economic Development and Cooperation Forum
  • Forum on Economic and Trade Cooperation between China and Portuguese-Speaking Countries[20]

4.  Distribution of Foreign Aid

Geographic Dimension.  The Chinese government reported that, by the end of 2009, China’s foreign aid had extended to 123 developing countries in Asia, Africa, Latin America, the Caribbean, Oceania, and Eastern Europe with the largest proportion in Africa.[21]  China also provided funding to more than thirty international and regional organizations.[22]

Sectoral Dimension.  China’s foreign aid projects cover agriculture, industry, economic infrastructure, public facilities, education, medical and health care, clean energy, and responsive solutions to climate change.[23]  By 2009, 61% of the concessional loans were invested to construct transportation, communications, and electricity infrastructures, with 8.9% allocated to energy and resources, such as oil and minerals.[24]

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II. Legal Framework

As noted above, as a non-DAC state, China does not necessarily conduct global assistance in strict adherence to ODA standards, but instead has developed a unique domestic concept of foreign aid.[25]  However, China’s comprehensive foreign affairs policies, in addition to over sixty years of global aid practice, have incorporated substantial ODA elements, particularly in terms of purposes and instruments, such as aiming to promote the economic growth and social progress of the recipient states and through the instruments of grants and concessions.[26]  By and large, China regulates international assistance on a more flexible and broader basis than standard ODA approaches.  

A.  Regulation of ODA

1.  Overview

Constitutional Foundation

The Chinese Constitution proclaims that China carries out an independent foreign affairs policy underpinned by five principles: (1) mutual respect for sovereignty and territorial integrity, (2) mutual nonaggression, (3) noninterference in each other’s internal affairs, (4) equality and mutual benefit, and (5) peaceful coexistence in developing diplomatic relations and economic and cultural exchanges with other countries.[27]  The Constitution underlies the footing of Chinese foreign affairs policy with noninterference and equality.

Policy Guidelines

The Eight Principles referred to above are regarded as the fundamental guidelines for the legal framework for China’s foreign aid, which is given (1) for the purpose of self-reliance and independent economic growth of the recipient countries, such as increased income and capital accumulation; (2) with no attached conditions and no requests for privileges; and (3) based upon mutual development rather than unilateral aid.[28]

The Eight Principles also address the modalities and applicable standards for foreign aid, including (1) economic aid with a deferrable repayment date; (2) Chinese equipment and materials of the best quality at negotiable prices, based upon international market prices; (3) assistance to local construction projects of the recipient countries; (4) technical assistance with the guarantee of ensuring that local staff fully master the techniques; and (5) the deployment of experts without special demands.[29]

Outline of Current Policy

The White Paper elaborated the Chinese government’s most recent principles of foreign aid policy, including the following:

  • Aid is to be provided under South-South Cooperation and on the footing of equality, mutual benefit, and common development, to fit with both China’s actual conditions and the needs of the recipient countries.
  • Aid should be undertaken with the aim of helping develop aided countries’ self-development capacity.
  • No political conditions to be attached to aid, no interference with others’ internal affairs, and no political privileges sought.
  • Aid should not exceed the government’s capability.  China provides foreign aid in line with its national conditions and applicable comparative advantages, to meet the needs of the aided countries.
  • Aid reflects adjustable policy making, meaning that there should be an innovative approach to the form of aid and reform of administrative mechanisms in order to keep pace with the development of domestic and international situations.[30]

2.  Implementing Agencies

The State Council is the highest executive organ to administer foreign affairs and enact related regulations, as authorized by the Constitution and the Legislation Law of China.[31]

The Ministry of Commerce (MOFCOM) is designated as the lead agency to (1) draw up the foreign aid plan, (2) map out and implement foreign aid policy and programs, (3) update the pattern of foreign aid, (4) determine aid programs and organize implementation, and (5) manage Chinese government funds for foreign aid.[32]  The MOFCOM divides the above functions among the following departments:

  • The Department of Aid to Foreign Countries (Department of Aid) takes charge of drawing up and implementing the foreign aid plan, policy, and programs; supervising foreign aid projects; handling intergovernmental issues and negotiations related to foreign aid; and signing relevant documents.[33]
  • The Executive Bureau of International Economic Cooperation (Cooperation Bureau) mainly takes responsibility for administering the implementation of complete foreign aid projects (CFAP).[34]
  • The China International Center for Economic and Technical Exchanges (Exchange Center) administers the implementation of China’s foreign aid materials projects (FAMP).[35]
  • The Training Center of MOFCOM (Training Center) runs foreign aid training projects.[36]
  • The Department of Finance of the MOFCOM manages the foreign aid fund and compiles relevant budget documents and final accounts.[37]

The Cooperation Bureau, along with the Exchange Center and the Training Center, conducts the tender invitation and negotiation processes under the supervision of the Department of Aid.[38]

The EIBC is responsible for accepting and reviewing loan applications, signing relevant agreements, issuing the loans, and supervising post-lending and repayment processes.[39]  As a policy bank founded in 1994 and solely owned by the Chinese government, the EIBC is under the direct administration of the State Council.[40] 

The MOF takes charge of the administration of the foreign aid fund through exclusive responsibility for drawing up the foreign aid budget and managing final accounts.  It also administers Chinese donations to other countries.[41]

The economic and commerce divisions of embassies and consulates of China shoulder a portion of the functions relating to foreign aid, such as assisting the EIBC with collecting outstanding debt from end-borrowers of concessional loans, assisting the MOFCOM in handling intergovernmental affairs, and supervising and administering the CFAP abroad.[42]

3.  Restrictions

The three types of financial resources that the Chinese government provides, which are grants, interest-free loans, and concessional loans, are oriented to different types of projects under distinct restrictive conditions.

Grants mainly support medium and small projects related to social welfare in recipient countries, such as hospitals, schools, low-cost housing, and water supply projects.[43]  Grants also flow to human resources development projects, technical cooperation, and emergency humanitarian aid.[44]  They are not subject to the economic conditions of the recipient.

Interest-free loans are granted to public facilities and projects to improve people’s livelihood in aided states, generally conditioned upon the economic conditions of the developing countries.[45]

The term “concessional loans” refers to the medium- or long-term, low-interest credit basically targeted to profitable projects for the aided states aligned with the purpose of stimulating the export of Chinese mechanical and electrical products.[46]  Concessional loans provided by the EIBC are tied to all of the following requirements:

  • The recipient must have a stable political status, relatively strong economy, and the ability to repay.
  • Mutual approval by China’s government and the aided country’s government.
  • Profitable projects, a borrower with good credit, and a guarantor with the ability to repay.
  • The amount of Chinese RMB borrowed is generally no less than an amount equivalent to US$2 million
  • Materials, techniques, and services purchased or imported from China are in general not less than 50% of the total amount of the loans.[47]

According to statistical data compiled by the Chinese government, by the end of 2009, China had provided concessional loans for 325 projects in seventy-six foreign countries.[48]

Although the Chinese government insists that China’s foreign aid should not be attached to political conditions, reports from a number of institutions allege that China uses foreign aid to trade off for diplomatic objectives, market access, natural resources, foreign investment advantages, and other benefits.[49]  A report on China’s aid to Africa by the International Monetary Fund (IMF) optimistically assessed the situation as a healthy transformation to mutual benefit upon a trading basis other than mere unilateral aid, i.e., satisfying the export and market demands of China, as well as the infrastructure and export-import needs of African nations.[50]

4.  Discretionary Aid

Chinese law does not encompass a particular legal term or concept that is comparable to “discretionary aid.”  The budget for foreign aid projects could be regarded as discretionary since each competent department subordinate to the State Council controls and manages its own budget account within its authority.[51]  However, such discretion is subject to certain principles and rules.

The annual budget for foreign aid, formulated by the MOF upon intergovernmental agreement, follows the principle of “a fixed sum for a fixed purpose,” which requires foreign aid funding to be accounted and managed separately by the MOF.[52] 

The foreign aid budget is subject to the following uses by law:

  • Expenditure for complete foreign aid projects, general supplies of goods and materials, military supplies, catastrophic expenditures, training staff from aided countries, wages of dispatched experts, and interest subsidies for concessional loans
  • Budgetary funds allocated to Chinese enterprises cooperating or in joint ventures with aided countries
  • Management fees and agency fees for enterprises and institutions embarking on foreign aid as delegated by the competent departments
  • Other costs approved by the State Council or the MOF, and incurred during foreign aid projects or the implementation of agreements[53]

No definition for “other cost” is provided, thus the scope and standard could be subject to the discretion of the State Council and the MOF.

5.  Oversight

China offers foreign aid through both financial and project channels, and the relevant oversight mechanisms are separated accordingly.  

Oversight of Finance

The foreign aid budget falls into the category of the state budget,[54] which is supervised by the NPC and the Standing Committee of the NPC (SCNPC).[55]  The NPC and SCNPC have the power to conduct investigations of the major issues or specific questions concerning the budget or final accounts.[56]

The MOF is a specific central agency able to inspect the utilization of the foreign aid budget and punish illicit delay, occupancy, and embezzlement of an appropriation in accordance with the Interim Provisions on Penalties for Violations of Fiscal Regulations promulgated by the State Council.[57]

The EIBC exercises supervision over concessional loans, including the management of loan projects, loan outflows, and repayment of the principal and interest.[58]  It reports to the MOFCOM on the implementation of loans on a regular basis.

Oversight of Projects

The MOFCOM has promulgated specific regulations related to the supervision of various aspects of the CFAP and the provision of aid materials.  These relate to the quality of the projects and their management, the qualification and classification of the enterprises implementing FAMP, the work safety system for CFAP, and the inspection of materials.[59]  The Department of Finance of MOFCOM is responsible for managing financial accounts and supervises use of the CFAP budget.[60]

The economic and commerce divisions of the Chinese embassies and consulates also assist the MOFCOM with financial supervision and guidance relating to the foreign technology groups in CFAP.[61]

No separate anti-corruption legislation or special mechanism regarding foreign aid was found. The investigation and penalty for embezzlement and bribery are basically governed by criminal laws and administrative regulations.

6.  Policy Considerations

On a variety of occasions the Chinese government has emphasized that China must build its foreign aid policy under the framework of South-South Cooperation (SSC) because it is still a developing country dependent on ODA to eradicate poverty and enhance social development.  In 2010, China’s GNI per capita was as low as US$4,260, merely 10% of the United States and with a ranking of 121 among all 215 listed countries.[62]

SSC pursues the objectives of fostering self-reliance and technological capacities, as well as enabling and expanding international communication of the developing countries through cooperation in the forms of sharing knowledge and experience, training, technology transfer, financial and monetary cooperation, and in-kind contributions.[63]

In the most recent Resolution on the Outline of the Twelfth Five-Year Plan for National Economic and Social Development (Resolution) released by the NPC, in addition to affirming the goal of increasing economic and technical aid to developing countries with respect to civil welfare projects, public utilities, and self-development capabilities, the NPC reaffirmed that SSC is the core attribute and long-term goal of China’s foreign aid.[64]  

Mutual Respect and Non-interference

The guiding principles of SSC require respect for national sovereignty, national ownership and independence, equality, non-conditionality, and noninterference in domestic affairs between developing countries.[65]  It is reflected in both China’s foreign affairs and foreign aid policies, the latter providing that China respects recipient countries’ rights to independently select their own path and model of development, and takes their actual needs into account when marking out assistance schemes.  Chinese citizens are legally required to observe local customs and traditions when engaging in aid projects.[66]

The non-interference approach has been criticized by some researchers under the assumption that it has enabled China to be more welcomed by corrupt governments or abusive regimes than ODA contributors, who require commitments from those aided governments relating to improving human rights, democratization, and transparent governance, while other researchers consider such an assumption a “misplaced exaggeration” because some countries that are perceived as relatively corrupt actually show significant improvements through China’s engagement of aid and investment.[67]

Mutual Benefit and Mutual Interest

It is noteworthy that mutual benefit, as a critical principle of SSC, has been strongly highlighted by the Chinese government to justify the gains China obtained from its foreign assistance practice, because SSC encourages extensive cooperation between South-South countries to achieve mutual development other than unilateral benefit.[68]  While SSC includes private funding and private donors with commercial tools in development assistance, both the UN and the OECD have admitted that the SSC mechanism is a departure from traditional ODA in terms of goals, scope, and delivery patterns, and have separately formed their own task units working on forging a more effective global aid architecture based upon merging positive indicators from the SSC practice.

The SSC model plays an important role in China’s assistance to African countries so as to satisfy needs and provide benefits to both sides.  In  the Sharm El Sheikh Action Plan (2010–2012) (Action Plan), agreed upon by China and forty-nine African countries at the Forum on China-Africa Cooperation in 2009, China made commitments as follows: (1)  to relieve certain debts owed by all heavily-indebted poor countries and the Least Developed Countries (LDCs) in Africa to the extent that they have diplomatic relations with China; (2) to increase investment and promote infrastructure development in Africa by not only providing free assistance and US$10 billion concessional loans within the following three consecutive years but also encouraging investment from Chinese enterprises; (3) to provide RMB500 million (about US$79.51 million) worth of medical equipment to thirty hospitals, which will be built by Chinese enterprises; and (4) to increase the China-Africa Development Fund to US$3 billion to support the expansion of investment from Chinese businesses to Africa.[69]  This Action Plan also mentioned that both sides have noted China’s fast growth of investment in Africa since the 2006 forum, “which is welcomed by the African countries.”[70] 

B.  Regulation of Private Contributions

China does not have a law that specifically governs private contributions relating to international aid.  Donations for domestic aid are primarily regulated by the Law on Donation for Public Welfare Undertakings (Donation Law).  An array of tax incentives have been provided to encourage private enterprises’ contributions to public welfare in accordance with the Donation Law. 

Administrative Measures for the Donations for Disaster Relief (Measures), as a derivative law under the Donation Law, has distinguished foreign aid donations from nationwide aid donations and provides that, “where catastrophic natural disasters occur and result in the need for foreign aid, the Civil Affairs Department under the State Council shall organize and carry out social donations and coordinate foreign aid by reference to the Measures.”[71]  Therefore, while it remains uncertain whether foreign aid falls within the above definition of “public welfare undertakings,” many private foreign aid donations go to a portion of programs run by the Chinese government. 

Donations to the RCSC for the purpose of international humanitarian aid may trigger a full deduction for the purposes of corporate income tax or personal income tax, provided that the RCSC meets the qualifications to accept the donations directly given or transferred to it.[72]

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III.  Foreign Aid Appropriations Process

A.  Bilateral Aid

The state budget is a key financial source for bilateral aid.  As noted in the White Paper, the central government directly finances grants and interest-free loans, along with other budgetary foreign aid disbursements.[73]  Such budgetary disbursements are subject to (1) the purpose of implementing China’s aid commitment under intergovernmental protocols that China has concluded, or (2) government approval.[74]  Another important source of bilateral aid results from the EIBC’s provision of concessional loans with a lower interest rate, which therefore necessitates interest subsidies from the government.[75]

The White Paper summarized the legal approval procedure for the foreign aid budget as follows:

[F]oreign aid expenditure is part of the state expenditure, under the unified management of the Ministry of Finance in its budgets and final accounts system.  The Ministry of Commerce and other departments under the State Council that are responsible for the management of foreign aid handle financial resources for foreign aid in their own departments in accordance with their respective jurisdictions. Each of these departments draws up a budget for foreign aid projects every year and submits it to the Ministry of Finance for examination, and then to the State Council and the National People’s Congress for approval and implementation.  Each department controls and manages its own funds for foreign aid projects in its budget.[76]

B.  Multilateral Aid

The DAC has observed that China is a high-share donor through bilateral channels but a low-share contributor in the area of multilateral aid, except for China’s key role in International Development Association (IDA) replenishment by making an additional voluntary prepayment of US$1.0 billion in outstanding IDA credits.[77]

However, according to the Chinese government’s view of multilateral aid, China has provided multilateral-level assistance, including comprehensive training and teaching programs, joint construction projects, and the deployment of technical personnel in cooperation with many international institutions, as demonstrated below:

  • Allocated US$8 million to the World Health Organization for use in Africa.[78]
  • Donated US$200,000 to developing countries between February 2008 and September 2010, many of which are least-developed nations, as part of the WTO’s “Aid for Trade” initiative.[79]
  • Pledged a total of US$30 million to the Food and Agricultural Organization (FAO) to help improve food production and rural people’s livelihoods, and donated US$10 million in 2009 and 2010 respectively.[80]
  • Trained more than 6,000 technicians for other developing countries over a period of more than twenty years in implementing the Technical Cooperation among Developing Countries (TCDC) program and by the end of 2009 had sent more than 700 agricultural experts and technicians to Africa, the Caribbean, and the Asia-Pacific area.[81]

Donations on behalf of the government and cooperative programs managed by the competent authorities may fall within the state budget.

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IV.  Other Types of ‘Aid’

As noted above, to date China has officially acknowledged eight official forms of foreign aid, some of which have obvious features that are “made-in-China” and may not fit the category of ODA as defined by the DAC.

A.  Complete Foreign Aid Projects

As the main form of foreign aid, CFAPs are referred to as productive or civil projects constructed in recipient countries that are:

  • financed by the Chinese government through grants, interest-free loans, or low-interest loans;
  • carried out with the assistance of enterprises selected by the Chinese government to provide materials, equipment, and technical personnel, and to inspect, survey, design, and guide the construction, installation, and production of the projects; and
  • subject to the administration of the MOFCOM.[82]

By the end of 2009, China had completed over 2,000 CFAPs involving a wide range of industry, agriculture, culture and education, health care, communication, power supply, energy, and transportation projects.[83]

B.  Technical Cooperation

Unlike under the standard ODA definition, technical cooperation provided by China mainly refers to a post-CFAP aid program that involves the deployment of experts to recipient countries where the CFAP has been completed.  Deployed personnel give technical guidance on the production, operation, or maintenance of the CFAP and provide managerial and consultant skills. Technical cooperation also comprises education and training in agriculture skills, handicrafts, and sports, and usually lasts one or two years on an extendable basis, upon request of the aided partner. [84]

C.  Medical Teams

Medical teams represent a locally-based program launched as early as 1963, when China dispatched the first medical team to Algeria.  Since then, China has continued sending medical teams and provides free medical devices and medicines to recipient countries.  This program also takes into account the need for training local staff and helping to improve local medical and health services. So far, there are sixty-nine beneficiary countries spread over Asia, Africa, Europe, Latin America, the Caribbean, and Oceania.[85]

D.  Debt Relief

China maintains a strong commitment to debt relief.  By the end of 2009, China had signed debt relief protocols with fifty countries throughout Africa, Asia, Latin America, the Caribbean, and Oceania, writing off 380 mature debts amounting to RMB25.58 billion (about US$ 4.08 billion).[86]

E.  Overseas Volunteer Program and Scholarships

The Overseas Volunteer Program was initiated in 2002. Volunteers designated and managed by the Chinese Young Volunteers Association, under the delegation and supervision of the MOFCOM, are sent to other developing countries to serve the local people in the field of education, medical treatment, health care, and any other aspect beneficial to the development of local public welfare.[87] Youth volunteers and Chinese language teachers constitute the majority of this group.[88]  

China also made a commitment to increase the number of scholarships and on-the-job masters’ degree programs for people from developing countries at the 2010 UN High-Level Meeting.[89]

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Prepared by Rong Xiang
Foreign Law Intern
Supervised by Kelly Buchanan
Chief, Foreign, Comparative, and
International Law Division I
February 2012

[3] U.N. GAOR, 55th Sess., 8th plen. mtg., U.N. Doc. A/55/L.2 (Sept. 8, 2000).  The signatories are committed to “grant more generous development assistance, especially to countries that are genuinely making an effort to apply their resources to poverty reduction.”  Id. pt. III, art. 15, ares552e.htm.

[4] Zhongguo de Duiwai Yuanzhu Baipi Shu (《中国的对外援助》白皮书) [China’s Foreign Aid (White Paper)] (promulgated by the State Council), China Daily (Apr. 21, 2011), at 4, upload/pdf/nachrichten/2011-04-21Chinas-ForeignAid-WhitePaper.pdf.

[5] Id. at 4.

[6] Id.

[7] Sven Grimm et al., Transparency of Chinese Aid: An Analysis of the Published Information on Chinese External Financial Flows 16 (Aug. 2011) (quoting Deborah Brautigam, The Dragon’s Gift – The Real Story of China in Africa 167 (Oxford Univ. Press., 2009)), available at

[8] Duiwai Yuanzhu Zhichu Yusuan Zijin Guanli Banfa (对外援助支出预算资金管理办法) [Measures for Administration of Budgetary Disbursement for Foreign Aid] (promulgated by the Ministry of Finance on June 24, 1998; effective on the same day), arts. 7.1, available at 5210199808.html; Zhongguo Jinchukou Yinhang Duiwai Youhui Daikuan Zanxing Banfa (Jinchu Yin Youdai Fa [2000] No. 26) (中国进出口银行对外优惠贷款暂行办法 (进出银优贷发(2000)第26号)) [Interim Measures of the Export-Import Bank on Concessional Loans to Foreign Countries] (promulgated and implemented by the EIBC on Feb. 14, 2000), art. 6, available at 36119.

[9] Jonathan Weston et al., China’s Foreign Assistance in Review: Implications for the United States 12 (U.S.-China Economic and Security Review Commission Staff Research Backgrounder, Sept. 1, 2011), 9_1_%202011_ChinasForeignAssistanceinReview.pdf.

[10] The foreign aid is as reported in the Guanyu 2010 Nian Zhongyang Benji Juesuan de Shuoming (关于2010年国家中央本级决算的说明)[Explanation of the 2010 State-Level Final Account Report], available on the official website of the MOF, at  GNI is cited from World Bank’s statistics, (last visited Jan. 30, 2012).

[11] Zhonghua Renmin Gongheguo Hongshizihui Fa (中华人民共和国红十字会法) [Law of the People’s Republic of China on the Red Cross] (promulgated by the Standing Comm. of the NPC on Oct. 31, 1993, effective on the same day), translated in Laws of People’s Republic of China [P.R.C. Laws] 247–54 (Legislative Affairs Commission of the Standing Committee of the NPC, Beijing, 1995), available in Chinese at http://www.

[12] RCSC, 2011 Nian Shouzhi Qingkuang Baogao (中国红十字总会2011年收支情况报告) [Financial Balance Report of the RCSC of 2011] (approved by the Board of Directors of the RCSC on Dec. 8, 2011), xxfb/gg/201112/t20111209_43462.html.

[13] White Paper, supra note 4, at 2.

[14] Guanyu 1957 Nian Guojia Yusuan de Zhixing Qingkuang he 1958 Nian Guojia Yusuan Cao’an de Shencha Baogao (关于1957年国家预算的执行情况和1958年国家预算草案的审查报告) [Report on Examining the Implementation of State Budget of 1957 and Draft of State Budget of 1958] (Reported by the Budget Committee of the first NPC on Feb. 1, 1958), available at htm; Guanyu1958 Nian Guojia Yusuan he 1959 Nian Guojia Yusuan Cao’an de Baogao (关于1958年国家决算和1959年国家预算草案的报告) [Report on Final State Account of 1957 and Draft of State Budget of 1958] (Reported by the Vice Premier Li Xiannian on behalf of the State Council on the first meeting of the second NPC on Apr. 21, 1959), available at 912734.htm.

[15] White Paper, supra note 4, at 2.  The Eight Principles are available in English at http://news.xinhuanet. com/english 2010/china/2011-04/21/c_13839683_17.htm (last visited Jan. 30, 2012).

[16] White Paper, supra note 4, at 2.

[17] Id.

[18] Id. at 5–9.

[19] Id. at 2, 4.

[20] Id. at 3.

[21] Id. at 9,10.

[22] Id.

[23] Id. at 11–14.

[24] Id. at 5.

[25] Measures for Administration of Budgetary Disbursement for Foreign Aid, supra note 8.

[26] White Paper, supra note 4, at 2.4.

[27] Xianfa (宪法) [Constitution of the People’s Republic of China] (1982, last amended Mar. 14, 2004), Preamble, translated in 2004 P.R.C. Laws 4.

[28] White Paper, supra note 4, at 3; Eight Principles, supra note 15.

[29] Eight Principles, supra note 15.

[30] White Paper, supra note 4, at 3–4.

[31] Constitution of the People’s Republic of China, supra note 27, art. 89(9); Lifa Fa (立法法) [Legislation Law of the People’s Republic of China] (promulgated by the NPC on Mar. 15, 2000), art 56(2), 2000 P.R.C. Laws 17.

[32] Shangwubu ZhuyaoZhize Neishe Jigou he Renyuan Bianzhi de Guiding (商务部主要职责内设机构和人员编制规定) [Provisions on the Main Functions, Internal Bodies and Staffing of the Ministry of Commerce] (promulgated by the General Office of the State Council on July 11, 2008; effective on the same day), art. 2(13), available at

[33] Id. art. 3(16).

[34] Shangwu Bu Bangong Ting Tiaozheng Yuanwai Xiangmu Guanli Gongzuo Zhineng Fengong de Tongzhi (商务部办公厅援外项目管理工作职能分工的通知) [Notice of the General Office of the Ministry of Commerce on Adjusting the Division of Work Functions in Connection with the Administration of China Foreign Aid Projects] (promulgated by the General Office of the MOFCOM on Mar. 5, 2007; effective on the same day), http://www.

[35] Id.

[36] Id.

[37] Provisions on the Main Functions, Internal Bodies and Staffing of the Ministry of Commerce, supra note 32, art. 3(6).

[38] Notice of the General Office of the Ministry of Commerce on Adjusting the Division of Work Functions in Connection with the Administration of China Foreign Aid Projects, supra note 34.

[39] Interim Measures of the Export-Import Bank on Concessional Loans to Foreign Countries, supra note 8, art. 3.

[40] An introduction to the EIBC is available in English on its official website, /profile/intro.shtml# (last visited Jan. 30, 2012).

[41] Measures for Administration of Budgetary Disbursement for Foreign Aid, supra note 8, art. 3.

[42] Zhongguo JinchukounYinhang Duiwai Youhui Daikuan Daihou Guanli Guiding (Jinchu Yin Youdai Fa [2000] No.3), (中国进出口银行对外优惠贷款贷后管理规定(进出银优贷发(2000)第338号)) [Provisions of Export-Import Bank of the People’s Republic of China on Post-Credit Management of Concessional Loans to Foreign Countries] (promulgated by the EIBC on Oct. 31, 2000), art. 26, Article. asp?ArticleID=36366.

[43] Id. at 4.

[44] Id.

[45] Id.

[46] Interim Measures of the Export-Import Bank on Concessional Loans to Foreign Countries, supra note 8, art. 6.

[47] Id. art. 7.

[48] White Paper, supra note 4, at 5.

[49] Thomas Lum et al., Cong. Research Service, R40361, China’s Foreign Activities in Africa, Latin America and Southeast Asia 9 (Feb. 25, 2009). 

[50] Jian-Ye Wang & Abdoulaye Bio-Tchané, Africa’s Burgeoning Ties with China, 45(1) Finance & Development (Mar. 2008), 03/wang.htm#author.

[51] Measures for Administration of Budgetary Disbursement for Foreign Aid, supra note 8, ch. 3.

[52] Id. art. 4.

[53] Id. art. 7.

[54] Yusuan Fa (预算法) [Budget Law of the People’s Republic of China] (adopted by the Standing Committee of the NPC on Mar. 22, 1994; effective on Jan. 1, 1995), art. 46, 1994 P.R.C. Laws 20.

[55] Id. art. 66.

[56] Id. art. 67.

[57] Measures for Administration of Budgetary Disbursement for Foreign Aid, supra note 8, art. 25.  The Interim Provisions on Penalties for Violations of Fiscal Regulations was repealed after the Regulations on Penalties and Sanctions for Fiscal Violations were promulgated by the State Council (effective Feb. 1, 2005), available at

[58] Provisions of Export-Import Bank of the People’s Republic of China on Post-Credit Management of Concessional Loans to Foreign Countries, supra note 42, art. 2.

[59] These regulations include Duiwai Yuanzhu Chengtao Xiangmu Guanli Banfa (Shixing) (对外援助成套项目管理办法 (试行)) [Measures for the Administration of Complete Foreign-Aid Projects (Trial)] (promulgated by the Ministry of Commerce on Dec. 31, 2008; effective on Jan. 1, 2009), art. 9, Xin Fagui Huibian, Feb. 2009, at 169; Measures for the Administration of Work Safety of Complete Set of Foreign Aid Projects (Trial), available at; Measures for Administration of Qualifications of Enterprises for Implementing Foreign Aid Complete Projects, available at xx/bw/swb/content_447921.htm; Measures for the Administration of Foreign Aid Materials Projects (Trial), available at

[60] Shangwubu Duiwai Yuan Chengtao Xiang Caiwu Guanli Banfa (商务部对外援助成套项目财务管理办法) [Measures of the Ministry of Commerce on the Financial Management of Complete Foreign Aid Projects] (promulgated by the MOFCOM on Jan. 20, 2010; effective on Apr. 1, 2010), art. 3, aarticle/huiyuanzl/201108/20110807719593.html.

[61] Id. art. 27.

[62] World Bank (World Development Indicators Database), Gross National Income Per Capita 2010 (July 1, 2011),

[63] What Is South-South Cooperation?, UNDP Special Unit for South-South Cooperation, (last visited Jan. 30, 2012).

[64] Quanguo Renmin Daibiao Dahui Guanyu Guomin Jingji he Shehui Fahzhan Di shi’erge Wunian Guihua Gangyao de Jueyi (全国人民代表大会关于国民经济和社会发展第十二个五年规划纲要的决议) [Resolution of the NPC on the Outline of the Twelfth Five-Year Plan for National Economic and Social Development] (promulgated by the NPC on Mar. 14, 2011, effective on the same day), ch. 5, 2011 Standing Comm. Nat’l People’s Cong. Gaz. 248.

[65] What Is South-South Cooperation?, supra note 63.

[66] Measures for the Administration of Complete Foreign-Aid Projects (Trial), supra note 59, art 9, at 169.

[67] Helmut Reisen, Is China Actually Helping Improve Debt Sustainability in Africa?, G-24 Policy Brief No. 9, OECD, at 1, 3, available at

[68] What Is South-South Cooperation?, supra note 63.

[69] Zhongfei Hezuo Luntan Shamu Shayihe Xingdong Jihua (2010–2012) (中非合作论坛-沙姆沙伊赫行动计划 (2010至2012年)) [Forum on China-Africa Cooperation Sharm El Sheikh Action Plan (2010–2012)], arts. 4.2.3, 4.3.3, 4.4.3 and 5.6.4,

[70] Id. art. 4.2.1.

[71] Jiuzai Juanzeng Guanli Banfa (救灾捐赠管理办法) [Administrative Measures for the Donations for Disaster Relief] (promulgated by the Ministry of Civil Affairs on Apr. 28, 2008, effective on the same day), art. 36, Xin Fagui Huibian (June 19, 2008) at 24.

[72] Caizhengbu Guojia Shuiwu Zongju Guanyu Qiye deng Shehui Liliang Xiang Hongshizi Shiye Juanzeng Youguan Wenti de Tongzhi (财政部、国家税务总局关于企业等社会力量向红十字事业捐赠有关问题的通知) [Notice of the Issues on Donations of the Enterprises and Civil Entities to the Red Cross Undertaking] (promulgated by the MOF and State Administration of Taxation on Mar. 8, 2001; effective on the same day), arts. 1(7), 2(1), 2(2),

[73] See White Paper, supra note 4, at 4.

[74] This summary is compliant with the provisions of the Measures for Administration of Budgetary Disbursement for Foreign Aid, supra note 8, art. 2.

[75] White Paper, supra note 4, at 4.

[76] Id.

[77] OECD, 2011 DAC Report on Multilateral Aid, at 31, 33, available at /5/61/49014277.pdf.

[78] Jonathan Weston et al., supra note 9, at 7.

[79] Ministry of Foreign Affairs of the People’s Republic of China & United Nations System in China, China’s Progress towards the Millennium Development Goals (2010 Report) at 60, cn/cms/p/resources/30/1539/content.html.

[80] Id. at 54–55.

[81] White Paper, supra note 4, pt. IV, “International Cooperation in Foreign Aid,” at 14, 15.

[82] Measures for the Administration of Complete Foreign-Aid Projects (Trial), supra note 59, art. 2, 6, at 168–69.

[83] White Paper, supra note 4, at 6.

[84] Id. at 7.

[85]  Id., at 7, 8.

[86] Id. at 9.

[87] Yuanwai Qingnian Zhiyuanzhe Xuanpai he Guanli Zanxing Banfa (援外青年志愿者选派和管理暂行办法) [Interim Measures for Designation and Administration of Foreign Aid Youth Volunteers] (promulgated by the MOFCOM on Nov. 2, 2004; effective on Dec. 2, 2004), art. 3, available at 2005/content_64311.htm

[88] White Paper, supra note 4, at 8.

[89] Six Measures for Foreign Aid Pledged by the Chinese Government at the 2010 UN High-Level Meeting on the Millennium Development Goals, art. 6, available at c_13839683_22.htm.

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Last Updated: 06/09/2015