Chinese aid helps put African nations on track

Employees of Tanzania-Zambia Railway pose for photographs in Dar es Salaam, the largest city in Tanzania. [Photo/Xinhua]

Basic principle

China's foreign aid began in 1950, when it provided material assistance to two neighboring countries, the Democratic People's Republic of Korea and Vietnam.

The basic principle for the country's foreign aid was formulated when Premier Zhou Enlai announced the Eight Principles for Economic Aid and Technical Assistance to Other Countries during his first visit to Africa from December 1963 to February 1964.

In the nearly 70 years since China began aiding foreign countries, it has always abided by the Eight Principles, whose key content embraces equality, mutual benefit and no political conditions.

"China's foreign aid is different from that of Western countries," Wang said. "We don't impose political strings, and we respect a recipient country's right in choosing its development path. Moreover, all our personnel for foreign aid share wealth and woes with African people and treat them just like brothers, which has impressed them a lot."

Chinese aid to Africa is also designed to help support the continent's development agenda, thus positioning China as a strategic alternative for such assistance.

George Nyongesa, a senior associate at the Africa Policy Institute, a think tank in Kenya, said: "China focuses on infrastructure development, which in turn facilitates follow-on investments. Additionally, as the West reduced aid to Africa in recent years, China has been ramping up its assistance and intends to set up an international development cooperation agency to coordinate its foreign aid."

Financial resources provided by China for foreign aid mainly fall into three types: grants, interest-free loans and concessional loans. The first two come from State finances, while concessional loans are provided by the Export-Import Bank of China as designated by the central government, according to the State Council Information Office.

China offers foreign aid in eight forms: complete projects; goods and materials; technical cooperation; human resource development cooperation; medical teams sent abroad; emergency humanitarian aid; volunteer programs in foreign countries; and debt relief.

Hisham AbuBakr Metwally, an economics researcher with the Egyptian Ministry of Foreign Trade and Industry, said Chinese aid has had a major impact on improving the lives of African people, as it targets basic services for citizens such as roads, railways and power stations, among others.

China turned to the participation of African countries in achieving their development plans, which contributed greatly to the high growth rates in nations such as Mauritius, Ethiopia, Kenya and Egypt, he said.

Furthermore, there is a large funding gap between what African countries require for infrastructure development and the money available. China contributes significantly to financing infrastructure projects, as well as the creation of more industrial zones that the continent desperately needs, Metwally said.

While sticking to the core values of the Eight Principles, China has been keeping pace with the times to transform its foreign aid system and specific ways of providing such assistance.

Wang said that in the initial stage, a number of African countries had just won their independence and were in great need of foreign development aid. China provided this in the manner required. As the country was still a planned economy at the time, the central government assigned tasks mainly to State-owned organizations.

"At the time, China was facing difficult situations both at home and abroad, and it provided all the assistance it could afford to African countries in their efforts to win independence and develop their economies, laying the foundation for a friendly relationship," Wang said.

In October 1971, China resumed its seat in the United Nations, with the support of developing countries, including those from Africa.

New road taken

After adopting the reform and opening-up policy in 1978, China started to develop a market economy, and its economic cooperation with other developing countries extended from economic aid to multiform and mutually beneficial cooperation.

"China adjusted the scale, arrangement, structure and sectors of its foreign aid in accordance with its actual conditions," Wang said. "It strengthened its foreign assistance to the least-developed countries and paid more attention to the economic and long-term effects of aid projects."

In 2000, the Sino-African relationship embarked on a new road when the Forum on China-Africa Cooperation was launched. This marked the transformation of the relationship from political and economic cooperation in limited areas to comprehensive cooperation in political, economic, social and cultural fields. Regular and frequent exchanges between China and Africa have been held since then.

Wang said Africa is no longer merely a continent that needs aid, it is a potentially big market. As African countries are at different levels of economic development, China is considering the kind of role the aid can play in advancing deeper and closer comprehensive economic and trade cooperation between the two sides.

"We consider how to use our aid to support the industrial development of African countries, consolidate their economic foundation and help them integrate with global development," she said.

In recent decades, Africa has witnessed far-reaching changes, and has seen one of the fastest rates of economic development globally, meaning there are now different requirements for aid from China, Wang added.

This year's Africa Economic Outlook from the African Development Bank shows that the continent's general economic performance continues to be encouraging. GDP growth reached an estimated 3.5 percent last year, about the same as in 2017 and up from 2.1 percent in 2016. Growth is projected to accelerate to 4 percent this year and to 4.1 percent next year.

"While African countries will still need funding, projects and materials, they now want to learn more about China's experience in governance and economic development, including how to stimulate market potential and the private sector," Wang said.

She added that faced with various demands for aid, China would consider its comparative advantages, and share more often with developing countries its solutions and experiences in governance and developing its economy.

"We consult with the recipient countries to find out what they need most and what we are best at, to make the best solution while providing aid," she said.

Nyongesa, the Kenyan analyst, said aid from China has been aligned to Africa's Agenda 2063, the continent's development blueprint. The eight major initiatives announced at the Summit of the Forum on China-Africa Cooperation in Beijing last year overlapped with Africa's development priorities as well as individual development strategies.

President Xi Jinping announced an additional US$60 billion in funding to largely facilitate improved railway systems, transportation and energy infrastructure, in addition to public health and industrialization. Nyongesa said, "These are areas that underpin Africa's structural transformation that is expected to lift millions out of poverty."

China has also been able to develop financing models to match African countries' economic capacity.

Mutambo, from the University of Johannesburg, said that to sustain cooperation, the Sino-African relationship needs to gradually move from a government-to-government to a private-to-private connection. "The private sector can benefit more if the African and Chinese governments promote responsive and good leadership, aspects which are often limitedly assessed under the scope of non-interference," Mutambo added.