Foreign Aid Modes from China (Essay Sample)

New donor countries and development banks have recently arrived on the international development scene. How is the Chinese approach to development aid changing established modes of foreign aid for development? Is this an effective model?
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INTRODUCTION
Development aid as widely referred to as foreign aid has been assistance by developed economies to developing and less developed economies in form of monetary or non-monetary transfers with a main aid for economic development (Brautigam, 2010). The inflows have been delivered inform of subsidies and at times inform of loans. The most common type is the official development assistance (ODA) program directed towards development and poverty reduction. Thus is given though loans, or channelled through international organisations like IMF, World Bank, and UN. There has been a lot of controversies on the best approach to this assistance since different persons have alleged that its importance is relevant, while others arguing that it is not needed.
There are people who have found that aid is not aimed at development but rather has led to increased conflicts in developing countries. In other cases it has been seen to actually slow developments in this countries (Pickbourn & Ndikumana, 2013). Other have alleged that well planned, it results to development and it has nothing to do with conflicts more so those occurring in Africa. As shown on the graph below, growth has been declining.
(Source: Bräutigam, 2011)
This creates a needs for assessment of how aid has been delivered in the past. Besides there is a need for evaluation of the model that has been adopted by China since most researchers recognise that china has a better approach to aid which has seen most developing economies emerge. This will thus lay a bases for the current analysis.
Foreign aid modes from China
International aid from China has been in the form of complete projects, goods and materials, technical cooperation, and human development assistance. Human resource has been inform of medical teams and volunteers, emergency humanitarian aid, and debt relief. Notable unlike other foreign aid donors, China really gives cash aid (Brautigam, 1998; Ntongwe, 2012). Major providers have increased as shown below which has changed the game.
Although United States ranks first in the given out for aid development, its power has been reduced over the year.
Research has shown that this were ties of political and economic interest. This is because, aid would be delivered to this countries who would intern surrender their citizens for slavery, and would also allow extraction of their natural resources (Ntongwe, 2012). From the figure below, most aid has been in form of bilateral development (33%). Apart from bilateral aid, China has also made use of multilateral aid, tied aid, project aid, military aid, and voluntary aid.
Source: (Ntongwe, 2012)
China has also made high concentrations on military and bilateral development projects (Okon, 2012). As shown on the figure below, apart from bilateral aid China also does a lot of multilateral aid development programs. Major bilateral programs have been in form of grants and interest free loans, as well as net disbursement of concessional loans.
As shown on the figure above, a high percent has been in support of bilateral projects which has led to complete project investment by China, human development projects, and humanitarian aid. As shown on the graph, aid programs from China have been increasing over the years. This is to say that the government has been having a lot of concentration on grants and loans to which it has released more amount from year to year.
Overall as shown on the figure below, aid development programs have been increasing. This is due to emergence of other economies like China who are offering it.
After intervention by the Chinese government, aid become a more committed program, and countries would commit 0.7% of their incomes to aid. By 1978, the World Bank started shifting gears to embracing donor funded programs for human development in providing water, food, sanitation, and shelter. This was after realisation that aid was not making an impact to the lives of people. Later development were to improve the living standards of people through education (Brautigam, 2015).
It was reported that countries relying on aid from China did not have conflict and crises like it has been argued in most debates (Bräutigam, 2011). Use of relief programs by China has helped a lot of countries that have been in crises like Somalia, Liberia, and South Sudan. As shown on the figure below, China has been paying a lot of attention to the least developed (39.7%) and low income countries (19.9%).
Source: (Bräutigam, 2011)
This kind of approach has been of a lot of help to China in giving it a competitive aid edge against other countries like US, Germany, and France that have concentrated on low and medium income countries.
In addition, China has made a huge investment in Africa, where other donors did not pay high attention.
Source: (Ntongwe, 2012)
This has given it a resource advantage other the other donors. It major recipients are shown on the figure below.
Chinese model
In the past aid has been on a self-interest base model, developments to meeting economic growth, as well as ensuring that people are able to meet their basic needs through programs has been fuelled. However, there has been little growth that has been witnessed. China as a global power, has come up with as self-mutual aid model (Wafula et.al, 2019). This model is based on ensuring that both parties are benefiting from the program, and thus each will use the opportunity for development. China has been making direct investment especially in Africa inform of grants and loans.
(Source: Wafula et.al, 2019)
The government of China makes the full investments which is to be repaid later by the said country. This has seen most developing countries grow their infrastructure, especially in roads, electricity, and building construction. Industrialisation and agricultural transformation is becoming evident in most of this developing countries. In return, China is able to get their money back with interest that is injected back for industrialisation. They are also able to get resources from this countries. The fair bit of this model is the fact that operations and negotiations are transparent and on a market value basis. It is not a political suit, of economic sabotage. The main purpose being promotion of trade through exports and imports, globalisation, relief due to natural calamity, and support for environmental protection (Aigheyisi & Ovuefeyen, 2013).
The Chinese model is based on infrastructural development and social assistance. Thus they are able to drive the economy as well as its people. Hence they are able to realise a good for the majority. In return, they make purchase of the African raw material. Thus bringing rise ot the mutual self-interest model. The country has made use of horizontal power relations where both government will seta and negotiate (Bräutigam, 2011). They have been against the colonial vertical power relations where negotiations were one sided. There has been a lot of drift towards education, and there has been a lot of support for sub-Saharan African in response to curbing poverty, and fighting with HIV/AIDS.
China budget in year 2013 was $6.4 billion and about $362 billion in 2014. They were able to establish the international development corporation to direct aid (Wafula et.al, 2019). They have been promoting social programs, economic development, and economic development. Most of the aid has been directed to Africa (51.8%).
(Source: Wafula et.al, 2019)
The aid has been purposed to developing economies making use of 8 main pillars to ensure it is well targeted. The major pillars have been equality and mutual benefits, respect, extended payment terms and interest free loans, self-reliant objective, ;less investment projects, quality equipment’s, technical assistance, and improvement of standards of living.
Changes due to Chinese’s model
Rich countries started making donations inform of aid to developing countries in the 19th century. Research has shown that foreign aid has led to slowed development. This is as result of the overreliance on aid. Consequently, they are not able to develop frameworks for self-sustainace. Most developing economies have not been able to realise their ability. For instance, in African, the countries are resource endowed and through efficient allocation, they can become global economies (Bräutigam, 2011). However, the thought that they must be assisted has buried this dream. Other researchers have alleged that aid has been a pool through which most countries have entered into endless conflicts. Termed as the resource curse in Africa. It has been stipulated that most developing countries do not have economic development and instead there is economic stagnation. Heated debates have risen from the topic with most people arguing that aid was not good for developing countries as it has only caused trouble, and has led to illusion of culture, lead to environmental degradation, and climate change is catching up with us. This is because in return this developed works will exploit natural resources more so from Africa.
After China investment in Africa, most African and emerging economies are now turning to China for aid. This has been stipulated to change powers