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China close to matching US in foreign aid flow — but often with Beijing's own interests in mind

  • While China could be set to usurp the U.S. as the leading donor of foreign aid throughout much of the developing world, AidData researchers stressed the country's lack of transparency meant its aid activities remained "poorly understood."
  • As part of President Donald Trump's so-called "America First" policy, the former New York businessman has called for significant reductions in foreign aid.
U.S. President Donald Trump (L) and Chinese President Xi Jinping (R) walk together at the Mar-a-Lago estate in West Palm Beach, Florida, April 7, 2017.17.
Jim Watson | AFP | Getty Images
U.S. President Donald Trump (L) and Chinese President Xi Jinping (R) walk together at the Mar-a-Lago estate in West Palm Beach, Florida, April 7, 2017.17.

China could be poised to overtake the U.S. as the world's primary donor of foreign aid to most of the developing world, a multinational group of researchers reported Wednesday.

"At the very top level, you could say the U.S. and China are now spending rivals when it comes to their financial transfers to other countries," Bradley Parks, executive director at AidData, told AP on Wednesday.

As part of President Donald Trump's so-called "America First" policy, the former New York businessman has called for significant reductions in foreign aid, prompting international concern and intense criticism from former White House officials and business executives.

However, while China could be set to usurp the U.S. as the leading donor of foreign aid throughout much of the developing world, AidData researchers stressed the country's lack of transparency meant its aid activities remained "poorly understood."

'White elephant' projects

The report found that, contrary to criticism from international policymakers that China tended to set up aid projects in order to benefit its own domestic aims, "Chinese aid substantially improves (the) economic growth" of its recipients.

Critics of Chinese foreign aid have long argued that the nature of its spending could allow some countries to avoid democratic reforms because they can simply ask Beijing for cash, while sidestepping the scrutiny of other Western donors.

AidData said that should the economic benefits of China's foreign aid "vanish or diminish" in the coming years, it could help explain why critics have claimed the country has a track record for funding "white elephant" projects.

African countries capture large chunk of China's foreign aid

Between 2000 and 2014, China committed over $350 billion in official finance to more than 4,300 projects in 140 countries around the world.

Meanwhile, U.S. overseas aid during the same period was slightly higher — at $394 billion — with Washington outspending Beijing for 10 out of the 15 years studied by AidData.

People visit the Tian'anmen Square on National Day on October 1, 2017 in Beijing, China. China is celebrating the 68th anniversary of the founding of the People's Republic of China.
VCG | Getty Images
People visit the Tian'anmen Square on National Day on October 1, 2017 in Beijing, China. China is celebrating the 68th anniversary of the founding of the People's Republic of China.

Since the turn of the century, the report found a significant amount of China's foreign aid was directed to African countries. In fact, in terms of project volume, it found seven of the top 10 nations receiving aid from Beijing were states in the African continent.

However, while African countries captured a large chunk of total aid and loans donated by China, in 2014 – the most recent year analyzed by AidData – Russia was the lead recipient, followed by Pakistan and Nigeria respectively.

The top recipients of aid from the U.S. in 2014 were Iraq, Afghanistan and Pakistan.

'State secret'

Previous studies from AidData found that international political developments often played a pivotal role in whether Washington or Beijing offered cash to developing countries. The research firm had shown that countries supporting China and the U.S. at the United Nations would often benefit by receiving larger amounts of foreign aid.

In specific relation to China, AidData researchers said economics was also found to play a big part in how Beijing opted to spend their money. The report said Beijing would often look for ways to promote its exports or market rate loans in order to ensure the loan is then repaid with interest.

"The Chinese government actually considers the details of its overseas development programs to be a state secret," Parks told CNN on Wednesday.

Correction: This story has been updated to reflect that China could be set to usurp the U.S. as the leading donor of foreign aid throughout much of the developing world.