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China in Africa: The Real Story

Billions in Aid?

Deborah Brautigam

Here in Washington, it's widely believed that China gives "billions in aid" to Africa. And no wonder. A World Bank report cited a figure of $44 billion for China's total aid to Africa between 1960 and 2006. (I point out in The Dragon's Gift that what the Chinese actually said was 44 billion renminbi (about $5.6 billion) over nearly 50 years.)

Mistakes like this are not too surprising, given the secrecy of China's actual aid figures.  However, up on Capitol Hill, a 2009 report from the Congressional Research Service "China's Foreign Aid Activities in Africa, Latin America, and Southeast Asia," has gone much further and in the process, done a great disservice to efforts to understand this issue.

Why? The simple reason is that that the CRS authors defined Chinese "aid" as all of China's state-sponsored activities: grants, loans, export credits, infrastructure projects and foreign investment. Their argument: "many PRC economic investments abroad can be counted as aid rather than foreign direct investment (FDI) because they are secured by official bilateral agreements, do not impose real financial risks upon the PRC companies involved, or do not result in Chinese ownership of foreign assets." But these factors, even if true (and that is debateable, particularly regarding financial risks), do not come close to making an economic transaction into "aid"!

(They also took their "data" from news reports, but that's another story.)

In 2007, they contend, China provided Africa with $17.962 billion in "aid" (Table 4, p. 8). This compares with estimates by a range of people (myself included) that put Chinese official development aid to Africa in 2007 much closer to $1.4 billion.

Then, having defined "aid" as all of China's state-related economic activities, they argue that "China’s aid to Africa is driven largely by its objective of securing access to oil and minerals for its growing economy" (p. 10).  But this reasoning is entirely circular. Having previously defined "aid" as including investment by China's state-owned companies in oil and minerals, as well as oil-backed, market-rate export credits, how could you come to any other conclusion?

Not surprisingly, this analysis of China's "aid" is now feeding into scholarly journal articles and books (I first noticed the report when an article I was asked to review cited it as the  source for a statement that China had given Africa $17.96 billion in aid in 2007).

Let's try harder to compare apples and apples, not apples and lychees. As a Washington Post article said yesterday, "China is no enemy, but inflating the challenge from China could be just as dangerous as underestimating it."