Is China a Challenge to the Global Aid Architecture?

Abstract

China’s rise is taking place within a set of rules, norms, and institutions that make up what is known as the global aid architecture. The purpose of this paper is to investigate the degree to which Chinese aid and development finance challenge the norms and rules of the aid system. The paper begins by arguing that the current norms, rules, and standards of the international aid (and development finance) architecture are contested, but can most easily be seen in five areas: (a) transparency; (b) tying/untying (c) social and environmental protections; (d) good governance conditionality including corruption, democracy and human rights; and (e) the management of debt. After comparing Chinese practice with actual regime for foreign aid and development finance as actually practiced, not only preached, by the OECD countries, the paper concludes that in several of these areas, Chinese practice is not as far from the OECD norm as portrayed in the conventional wisdom. This opens the possibility that Chinese practices will evolve, as have the practices of the OECD countries, particularly in the area of aid tying, transparency, and social and environmental protections. On the other hand, the West’s practice in the area of debt sustainability may be evolving closer to the Chinese position.

Keywords: China, Foreign Aid, Aid Regime, Norms, Institutions, Development Finance