Saturday, July 10, 2010

China moves from aid recipient to donor

As China's economy boomed it soon thereafter moved from being an aid recipient to an aid donor. The rich nations have stopped giving aid to China in recent years, but now view China's aid to poor nations with suspicion.

From the Inter Press Service, writer Mitch Moxley has this analysis of China's move up the development ladder.

Following the lead of other Western nations, Britain’s Development Secretary Andrew Mitchell said in June that the 40 million pounds (60.6 million U.S. dollars) that his government sends annually in China – home to the world’s fastest growing, and soon to be second largest, economy – would be better spent elsewhere.

"UK money should be spent helping the poorest people in the poorest countries, with every penny making a real difference by giving families the chance of a better future," Mitchell said.

Indeed, China, whose own poverty rate has plummeted over the last two and a half decades, has in recent years become a formidable aid donor and investor in developing countries.

According to a report released in 2009 by the U.S. Congressional Research Service, China’s aid to Africa, Latin America and South-east Asia increased from less than one billion dollars in 2002 to an estimated 25 billion dollars in 2007.

"In the past several years, the People’s Republic of China (PRC) has bolstered its diplomatic presence and garnered international goodwill through its financing of infrastructure and natural resource development projects, assistance in the carrying out of such projects, and large economic investments in many developing countries," the report said.

The study found that China’s foreign aid activities in African and Latin American countries serve its long-term economic interests – via infrastructure and public works projects and natural resource development – whereas those in South-east Asia reflect longer-term diplomatic and strategic objectives.

However, the report noted that while China’s aid projects "are a highly visible reminder of China’s growing ‘soft power,’ other countries and regions, such as the European Union, the United States and Japan, continue to dominate foreign direct investment in Africa, Latin America and South-east Asia."

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