Chinese aid and country image: Average and heterogeneous patterns

Abstract

In this paper, we provide novel evidence on the effects of Chinese aid on China's country image. Our analysis exploits data on Chinese aid projects and local perceptions of China from 2002 to 2015 with a staggered difference-in-differences empirical strategy. We find that, on average, the Chinese aid has no significant effect on China's country image. More importantly. we further classify Chinese aid into five sectors and establish significant heterogeneous patterns: Chinese aid in the education and health sector has a positive and significant effect on local perceptions of China, while aid in the infrastructure sector yields a negative effect. Further investigations provide suggestive evidence that the economic development and local employment may be main channels. Finally, we highlight the vital role of bilateral political relations and substantial heterogeneity regarding geographical regions of recipient countries.