China's Foreign Aid and Government-Sponsored Investment Activities: Scale, Content, Destinations, and Implications

Abstract

Abstract : With the world's second largest economy, China has the capacity to engage in substantial programs of development-assistance and government investment in any and all of the emerging market countries. In the first decade of the 21st century, it has expanded and directed this capacity in 93 countries for both the benefit of the recipients and its own interests. Yet, until recently, little was known about the size and direction of such programs. Thomas Lum of the Congressional Research Service (CRS) offered an initial estimate of the scope and purpose of China's aid and government-sponsored investment activities in Africa, Latin America, and Southeast Asia. In this report, we expand upon those findings, assessing the scale, trends, and composition of China's foreign aid and government-sponsored investment activities (FAGIA) in Africa, Latin America, the Middle East, South Asia, Central Asia, and East Asia. We find that such programs have burgeoned in recent years, with an emphasis on the development of foreign supplies of energy resources and ferrous and nonferrous minerals. Loans finance many of these programs and feature substantial subsidization, but loans also are accompanied by rigorous debt-servicing conditions that distinguish China's foreign aid from the grant financing that characterizes development aid provided by the United States and other nations of the Organization for Economic Co-operation and Development.

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