Donors’ impact on China: How have major donors affected China’s economic development and foreign aid policy?

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Introduction Recently China has been expanding its foreign aid program dramatically. According to the first Chinese white paper on foreign aid, published in April 2011, China increased its foreign aid expenditures by an average of 29.4 percent over 2004-2009 (Information Office of the State Council 2011: 5). Partly due to such a dramatic increase, China is often categorized as being one of the most important of the so-called “newly emerging donor countries.” This expression is somewhat misleading, however, because China has a long history of offering foreign assistance to many developing countries. As early as June 1950, just eight months after the establishment of the People’s Republic of China (PRC) on October 1, 1949, China began offering foreign assistance. At the same time, we should not dismiss the fact that China has a long history of receiving foreign assistance as well. Major donors to China have shifted over time; from the Soviet Union in the 1950s, to Japan from the late 1970s to the present. There was a period in the 1960s during which China was “selfdependent,” however, China has been a recipient of foreign aid since 1980. Focusing on China’s unique experience of being a concurrent donor and recipient, this chapter addresses the following two questions: How did China’s experience of being a recipient affect its own foreign aid policy? How did China’s status as a recipient transform its foreign aid policy? I argue that foreign donors played a significant role in shaping China’s development path and in affecting its policy regarding foreign aid to other countries. More specifically, the Soviet Union played a critical role in shaping China’s planned economy, starting in the 1950s, and Japan had a great impact on China in the early phases of the implementation of its Open and Reform Policy and formulating foreign aid policy. In particular, this chapter stresses the link between the knowledge that Chinese leaders were eager to acquire and the policies that the Chinese government produced. The first part of this chapter examines China’s experience of receiving Soviet assistance in the 1950s, and shows that China’s foreign aid policy was greatly influenced by its own experience as a recipient. The second part provides a brief explanation of China’s “self-reliance” in the 1960s to themid-1970s, and reveals that China continued to offer foreign aid despite the sudden termination of Soviet assistance. The third section explains major changes in China’s receipt of foreign assistance as well as in the manner in which it offered foreign aid in the late 1970s. Last, this chapter briefly investigates the extent to which Japan has contributed to China, and concludes that Japan’s significance peaked in the late 1970s and mid-1980s.