Debunking Myths about China: The Determinants of China’s Official Financing to the Pacific

Abstract

ABSTRACT With China rapidly expanding its aid programme in the Pacific Islands region, there is a growing concern among established powers about China’s sway over the aid-dependent Pacific Island states. Systematic studies of China’s development finance to the small island countries are, however, rare and generally limited to mapping Chinese finance flows in the Pacific. This study seeks to contribute to the literature on China’s development efforts in the Pacific Islands region. Drawing on project-level data from AidData for the period 2000–2014, this paper disaggregates China’s official financing into its constituent parts and systematically explores the determinants of China’s Official Development Assistance (ODA) and its commercially-oriented finance flows to the Pacific. The panel data analysis finds that, contrary to popular belief, China does not reward voting compliance in the United Nations nor is its allocation of financing to the Pacific influenced by the countries’ level of indebtedness.