Foreign aid from China is often characterized as ‘rogue aid’ that is not guided by recipient need but by China’s national interests alone. However, no econometric study so far confronts this claim with data. The study finds that political considerations are an important determinant of China’s allocation of aid. However, in comparison to other donors, China does not pay substantially more attention to politics. In contrast to widespread perceptions, the study finds no evidence that China’s aid allocation is dominated by natural resource endowments. Moreover, China’s allocation of aid seems to be widely independent of democracy and governance in recipient countries. Overall, denominating aid from China as ‘rogue aid’ seems unjustified.
According to the Financial Times, China outperformed the World Bank as the world’s largest provider of overseas loans to developing countries through its China Development Bank and China Export-Import Bank amounting to at least US$110 billion in 2009 and 2010. Tanzania was the single most important recipient of Chinese economic aid between 1956 and 1987. 62.0% of China’s economic aid between 1956 and 1987 has been provided to Africa, highlighting China’s aspirations to become the leading power in the Third World. 22.7% of China’s economic aid in this period were provided to Asia, with the intention of creating “friendly relations with its closest neighbours”.