China’s “Green Aid” Offers Lessons for the World

Newly Released White Paper on Chinese ODA

Chinese foreign aid has long been accused of being nontransparent and of having multiple strings attached. Analysts worldwide have attributed the rapid growth in China’s official development assistance (ODA) since 1997 to the rising global power’s hunger for energy and natural resources. Although China has traditionally remained silent in addressing such allegations, a newly released government White Paper reveals that the country is finally opening its ODA vault.

The White Paper, for the first time, lifts the veil on China’s aid modalities, distribution, and funding over the past few decades. This unveiling may not be particularly transparent by western standards, but it does at least offer a concrete view of what the country has been up to. According to the White Paper, by the end of 2009, China had launched 2025 development projects in total, about 5% of which is for oil and mining industries. More than half of the projects are devoted to the development of local economic infrastructure and public facilities.

Contrary to widespread belief, for example, the report indicates that only 8.9 percent of China’s concessional loans to developing countries went to support the extraction of energy and mineral resources, such as crude oil. Other highlights from the report include:

  • By the end of 2009, China had offered 256.3 billion Yuan (US$ 39.4 billion) in foreign aid, of which 106.2 billion Yuan was free aid, 76.5 billion was interest-free aid, and 73.6 billion was concessional loans.
  • China’s free aid was devoted mainly to small and medium-sized social welfare projects, such as building hospitals and schools. The interest-free aid was used exclusively for public infrastructure and projects related to people’s livelihoods, and the concessional loans targeted industrial production and large and medium-sized infrastructure projects.
  • China Concessional Loans

    In addition to the 8.9 percent of loans that went to resource-related projects, 61 percent of China’s concessional loans went to supporting large infrastructure projects such as transportation, communications, and electricity.

  • Support for low-income and least-developed countries accounted for two-thirds of all Chinese aid. By the end of 2009, 161 countries and more than 30 international and/or regional organizations had received aid from China, including 123 developing countries.
  • Asia and Africa, the two regions with the largest poor populations, received approximately 80 percent of China’s foreign aid.

The report indicates that rather than focusing exclusively on countries that share political ties or that have rich energy and resource reserves, China’s distribution of foreign aid has been balanced and need based. Most projects have been aimed at helping recipient governments develop their agriculture and industrial sectors, economic infrastructure, public facilities, and educational and public health systems, with the overall goal of improving human well-being.

In recent years, China’s foreign aid has also focused on the emerging field of climate change mitigation. The White Paper devotes an entire section to clean energy and climate-related projects.

China has a long history of developing biogas and small hydropower and has been using these renewable sources as its main clean energy technologies for foreign aid. In the early stages, China helped developing countries in Asia and Africa with small and medium-sized hydropower stations and grid construction, to provide electricity for industrial, agricultural, and household use. In the 1980s, China cooperated with relevant United Nations agencies to introduce biogas technology to developing countries. At the same time, China transferred biogas technology bilaterally to Guyana, Uganda, and elsewhere. These technology transfers helped to reduce the recipient countries’ dependence on imported fuel.

More recently, due to the rising impact of global climate change, China has expanded its scope of related aid. It launched biogas technology cooperation with Cuba, Guinea, Tunisia, and Vanuatu and built hydropower stations in Burundi, Cameroon, and Guinea, among other countries. China also has engaged in solar and wind power cooperation with Lebanon, Mongolia, Morocco, and Papua New Guinea, among others.

In addition, China has organized multiple training sessions on climate change and clean energy for many developing countries. From 2000 to 2009, it conducted some 50 sessions on biogas, solar energy, small hydropower, and other renewable energy development and use, as well as on forest management, desertification, and other topics. More than 1,400 participants from the developing world have attended these training courses.

It is encouraging to learn that China is willing to share its clean energy successes with other developing countries. But because the White Paper does not specify the scale of this aid, it is difficult to assess its impact. The Worldwatch Institute, in an ongoing research project funded by the Finnish government, is examining in detail China’s foreign aid data and exploring the potential to share the country’s “green development” experience. Worldwatch hopes to identify practical platforms and measures to help other developing countries pursue green transitions in more effective ways.

China is the world’s largest energy consumer and greenhouse gas emitter, and it is facing increasing international pressure to contribute to global climate mitigation and adaptation efforts. As the world’s second largest economy, China has more capacity than ever to help its fellow developing countries. Moreover, the Chinese government hopes that its embrace of “green aid” will alter the Western media’s perception of the country as a “resource digger.” From this perspective, green aid is definitely a win-win solution for China.

Please stay tuned for findings from the forthcoming Worldwatch Institute report.

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