Abstract
Since the establishment of traditional Chinese foreign aid, the People’s Republic of China has participated as both a donor and a recipient in foreign aid mechanisms. This has become a major issue in international relations. Until the Export-Import Bank of China and the China Development Bank were established in 1994, Chinese foreign aid could be considered traditional. As the focus of this study, traditional Chinese foreign aid has gained a disparate place in the literature due to its high level of involvement with aid mechanisms, domestic economic resources and motivations. In particular, the relationship between the PRC’s foreign aid motivations and its economic resources showed how effectively mainland China applied the foreign aid mechanism, which has been one of the main issues of these international relations. This study examines the relationship between the different economic conditions and foreign aid motivations of the Mao Zedong and Deng Xiaoping periods and attempts to reveal certain continuities and changes between the two periods.
Keywords
Introduction
As relentless struggles for independence began for some African and Asian states, the Second World War made the polarisation of the current international system more prominent. The concept of ‘two intermediate zones’ (Zedong 1963), which Mao put forward with reference to the distinction between the low-middle-income Southern states and the advanced capitalist Northern states, became the unwritten source of this pioneering struggle in China. In the relevant period, mainland China, which actively used economic statecraft in conducting its international relations (Zhang 2014), applied foreign aid as a useful tool starting in the 1960s. It plays a pioneering role in the eyes of developing states that have gained their independence or have waged stiff domestic struggles. The PRC, which had neither a colonial past like those of traditional donor states nor a revisionist strategy in international politics, has been a foreign aid recipient and donor at the same time for a long time, thus gaining the admiration of other recipient countries. These positive developments increased China’s appetite to provide more foreign aid with different motivations both in the Mao and Deng periods and made a serious financial contribution to low- and middle-income countries. 1
Conversely, China has also faced certain challenges in utilising foreign aid. Particularly in Africa, China entered a tight competition (Shinn and Eisenman 2012, 257) with the Soviet Union in foreign aid. China also came up against several domestic challenges, especially under the Mao administration. Abortive economic policies, political instability and critical political initiatives, such as the Great Leap Forward and Cultural Revolution, significantly affected China’s foreign aid practices. This dire national trajectory has made it difficult to convince the Chinese people and government officials of the necessity of ideologically and politically based foreign aid. Still, in some periods, China has managed to exhibit an unprecedented performance in history in terms of the ratio of Chinese foreign aid to total government spending. 2
Many internal dynamics come into play in the process of developing foreign aid. The national and international perceptions of current leaders and the economic and developmental policies of the state are, in effect, the primary internal dynamics of foreign aid. This study aims to compare the motives behind the foreign aid of the Mao and Deng periods based on these dynamics by placing particular focus on the economic and development experiences of both periods in detail.
The study will first address the economic and development policies of the two periods. In the light of Leninist Soviet-style new economic policy during the Mao era, this section discusses the extent to which development strategy, influential economic and social policies such as agrarian reform, collectivisation and the Great Leap Forward affected China’s foreign aid strategy. In Deng Xiaoping’s period, on the other hand, the opening-up policy, which underpinned a liberal market along with the motto ‘readjusting, restructuring, consolidating and improving [the national economy]’ (Onoye 2007, 359–60), caused different motivations for Chinese foreign aid.
I will also touch upon the decisions, views and policies of the leaders in both periods towards national and international developments. Mao’s highly centred governance, intended to strengthen national unity; his efforts to increase the consolidation of communist ideology both locally and internationally and alternative international system approaches, such as the ‘intermediate zone’ approach, had strong influences on foreign aid motivations. After that, Deng Xiaoping’s reform process, pragmatist and slightly more decentralised governance style resulted in different motivations for foreign aid.
Methodological and Conceptual Framework
The method of analysis employed on this study is a descriptive approach based upon historical analysis. The study aims to reveal consistent and informative conclusions in a historical context by examining the policies, social and economic conditions and domestic developments of the Mao and Deng periods. Chinese foreign aid had a traditional characteristic until the establishment of the China EXIM Bank and China Development Bank in 1994, which was less attentive to economic interests and less similar to the foreign aid structure of traditional donors. Despite massive political and economic transformations during these two periods, China has purveyed noticeable foreign aid in terms of the ratio of foreign aid to government spending. So, this study seeks answers to the following questions: What were the main economic sources of the Mao and Deng eras when China provided foreign aid with traditional characteristics? Further, what were the motivations that required China to emphasise foreign aid, even though it was not in its economic heyday and the corporate and modern aid structures had not yet been fully developed?
According to the OECD definition, foreign aid includes grants, loans and debts that are given to a particular country or international organisation deprived by another country(ies) or organisation(s) to encourage economic and social development, enhancement of democracy and basic liberties, social equality, the implementation of essential requirements in crisis, etc. (OECD, 2021, Official Development Assistance). Regardless of whether financial concerns exceed in certain periods, political and ideological intentions may likewise track down a convenient spot in supporting countries in need because of foreign aid’s critical role as a tool of power and influence. Thus, foreign aid has undergirded Beijing to form its own status and position in the international arena. China distributed foreign aid to more than 100 countries (Yi 1997) in light of the principles of mutual benefit, non-intervention and self-sufficiency until the late 1990s. Meanwhile, Chinese aid has additionally taken various form with a complex effect on recipients. In addition to the principles behind Chinese foreign aid, the amount of foreign aid is one of the most controversial issues. It is not possible to state with certainty the amount of foreign aid that China distributed or promised, especially between 1964 and 1994. Nevertheless, the data compiled from the many Western and Chinese sources show great consistencies and contain enlightening information.
To begin with, according to a compilation of two European scholars, China distributed $3.38 billion in foreign aid, excluding military aid, to Third World countries between 1956 and 1973 (Bartke 1975, 10–11), and $3.47 billion between 1957 and 1974, according to another author (Horvath 1976, 20–21). According to another study, China distributed approximately $11 billion in aid from 1953 to 1992 (Lin 1996, 36–38). According to OECD reports, the amount of bilateral aid provided by China until 1985, excluding communist countries, was $9.3 billion. 3
As in different areas of politics and economics, several unique features of China emerge regarding foreign aid. Unlike other traditional donors, China signals an organic link between foreign aid and non-aid economic activities (Shimomura and Ohashi 2013, 7). According to this approach, the trinity of aid, investment and trade should not be separated from each other, so that both the recipient country and the donor country may gain the maximum benefit (Zhou 2010). This is because economic opportunities likely create more appropriate conditions for both.
A comprehensive understanding of all dimensions of the Chinese aid mechanism is essential to better examining the economic sources and foreign aid motivations of the two periods that are the focus of the study. China attempts to keep its aid more confidential, particularly due to its own domestic ideological and political reasons and lack of membership in a mechanism such as the Development Assistance Committee under the Organisation for Economic Co-operation and Development (OECD). Although this confidentiality makes it difficult to access the very fine details of Chinese aid, some differences with the foreign aid practices of traditional Western donors in general can be found.
While China has mostly been distributing its aid unilaterally with its state-owned corporations rather than multilaterally, it has also included a number of economic assistance programmes outside the traditional concept of foreign aid, such as trade credits and technical assistance (Lancaster 2008, 39). This unilateralism and novel scope of foreign aid have been another example of the Chinese versions of international regimes, such as the Beijing Consensus, 4 which has been the subject of much academic literature recently. The unique character of Chinese foreign aid was not limited to these two dimensions. In addition, the principles put forward by Chinese leaders during their visits to Africa, both in the 1960s and the other in the early 1980s, differed from those of traditional aid. The major principles included unconditionality, non-interference in internal affairs, equality and mutual benefit.
Addressing China’s foreign aid sources and motivations is also important in terms of understanding the relationship between the structure of the international system and the foreign aid mechanism. More specifically, in the post-World War II era, when the state’s role in economics as the check and balance mechanism was wider, foreign aid was mostly bilateral and used to erase the traces of international catastrophes. With the establishment of the OECD in the 1960s and liberal institutions and practices becoming the dominant paradigm since the 1980s, foreign aid has also become institutional and multilateral while incorporating more liberal principles. In addition to the economic and financial sources of Chinese foreign aid, the next part of the study will also highlight how Chinese foreign aid practices have differed in terms of process by describing the disparate motivations of the Mao and Deng periods.
The Ideologically based and Politically Motivated Foreign Aid of the Mao Era
China’s foreign aid gained ground and established a solid foundation under Mao Zedong’s global policy. His views were a mixture of communist ideology and a world view that was meticulously derived from history (Copper 2016, 54). In the mid-1950s, Mao Zedong’s loss of confidence in the Soviet Union also shaped his attitudes towards global politics. Unlike the denotation of a firm bipolar system at that time, Mao Zedong enforced a looser system, making it easier for China to focus on the Third World and not treating these countries as one of these poles (Copper 2016, 55–56). As Mao’s Soviet-style economic approach prioritising capital inflows and agriculture was a significant source for foreign aid of the period, his attitude towards Third World countries and China’s competition with the Soviet Union underpinned the motivations of Chinese foreign aid.
Economic Roots of the Period
A glance at the economic and financial resources of Chinese foreign aid provides us with enlightenment concerning the difficult conditions under which China undertook its foreign aid activities. Under Mao’s leadership, China implemented the Soviet New Economic Policy (Bramall 1995, 314–16). This was a semi-socialist, semi-capitalist model attracting the flow of capital towards the country. With this model, some ventures taken in Mao’s first period based on gradualism, especially in the field of land, formed the basis of China’s economy in the following years. The leading initiatives included the ‘Agrarian Reform Law’, which distributed ownership of the land to lower classes of society, and the ‘First Five-Year Plan’, which strengthened the socialist structure of the Chinese economy. Although these initiatives resulted in a relative increase in the total agricultural output, 5 they could not provide sufficient capital accumulation in the country for targeted industrial development. 6
It was understood that the desired development would not be achieved with only income from agriculture. In Marxist terms, the change in forces of production should have accompanied the change in relations of production. Thus, from the mid-1950s to 1962, China entered a process of transition from gradualism to a faster socialist economy, with rapid collectivisation and nationalisation of private sector assets.
While weakening the centralist economy by focusing on more rural sectors (especially in coastal regions) (Copper 2016, 89), Mao argued that a more balanced strategy in development should be followed, signalling the first dealignment from Soviet-style development. Although this strategy significantly contributed to agricultural production (National Bureau of Statistics of China 2000) and capital accumulation, 7 the shift of resources and labour from consumer goods to heavy industry in the following period accelerated the process that led to the famine and the Great Leap Forward. While the growth rate remained at only 16% in 1960, during this period agricultural and industrial output remained well below planned levels (Li 1963, 5). A country like China, which had adopted the principle of self-sufficiency, had to import some basic necessities, including food, during the same period (Li 1963, 5). In brief, development attempts in this process faced three main problems. The first was that agricultural production lagged behind the level that would support the industrial development goals, as previously stated (Selden 1988, 134). Another major problem was the considerable imbalance in the employment market caused by intense rural-to-urban migration and capital-intensive industrial priorities (Selden 1988, 134). The last problem was an increase in class divisions, especially in rural areas (Selden 1988, 134).
After the mid-1960s, Mao’s economic understanding changed dramatically. It is possible to call the Chinese development strategy of this period neither capitalist nor Stalinist. For instance, the free market, which would emerge as an organic part of a capitalist model, could require the communist party to crush its commitments on issues such as equality and immigration (Bramall 2008, 142). Therefore, it was not fully implemented. On the other hand, Chinese policymakers renounced the Stalinist economic understanding that preached the central economy by excluding the countryside and small-sized sectors (Bramall 2008, 142). It was understood that China needed a production system that could include all levels and regions of the country.
It was not only the development model that changed in this process. The intellectual background of development was also transformed. While forces of production changed in the first period and relations of production in the second period, a change in superstructure was a goal in this final period of Maoist economic thought. In economic terms, the Third Front movement between 1964 and 1971 was an investment programme based on military preparation aimed at shifting production to the Western regions of the country, which could provide a self-sufficient industrial capability in the realm of the possibility of a war. Under this movement, in 1964, Mao did not even endorse the draft of the Third Five-Year Plan for greater emphasis on basic industrial goods (Naughton 2018, 73–74). Intellectually, understanding of ‘purge of the party and institutions of state’ eventuated the ‘Socialist Education Movement’ and the ‘Cultural Revolution’, while reforms in education eventuated the withdrawal of the examination-based progress, a coordinated continuation of study and work in the entire education system and enlargement of rural schooling (Bramall 2008, 155).
As can be seen, a wide variety of development strategies were implemented in Mao’s period, and after all, these strategies had profound socio-economic consequences. Meanwhile, China fell far behind its industrial targets and failed to feed its huge population. However, in this process, it has increased its foreign aid, especially since the 1960s. This process, which started with the ‘Socialist Education Movement’ in 1963 and aimed to restrict revisionism and change the cultural structure of China, was later thrown into much sharper turns. The Cultural Revolution (long known as the Great Proletarian Cultural Revolution), which started in 1966 as a continuation of this movement, led to huge aggravation in society against ‘old’ and very traumatic sociopolitical developments. China’s foreign aid motivations better explain why China, which was unable to fully fit its own economic model, has dispensed such an amount of aid.
Foreign Aid Motivations of the Period
The political and ideological motives of Chinese aid distinguish it from other nations’ aid programmes. The early economic, technological and military difficulties that China faced made it necessary for the Chinese leaders to immediately consolidate the communist movement, especially in the periphery (Copper 2016, 76). Consequently, bloc countries, notably North Korea and North Vietnam, were the first beneficiaries of China’s foreign aid allocation. After Mao began to restrain his commitment to ‘tight bipolarity’ and attach more importance to non-communist states, this ideology-based aid mentality began to change. In the second half of the 1950s, China distributed aid to 12 countries, eight of which were non-communist (Copper 2016, 76).
After the 1960s, when his close relationship with the Soviet Union gradually disappeared, Mao Zedong started to clarify the theory of ‘two intermediate zones’ mentioned above profoundly and kept purveying foreign aid to Third World countries, notwithstanding appalling events like the Great Leap Forward. Zhou Enlai’s African tour in 1964 nearly doubled Chinese foreign aid (Copper 2016, 78). The competition between China and the Soviet Union intensified in the late 1960s. This tension dragged these two countries into a race 8 for foreign aid. This situation also caused Chinese foreign aid to double in 1970 compared to the previous year (Copper 2016, 78).
Besides the issue of communism and the struggle with the Soviet Union, supporting the liberation movements in the newly independent states (especially African ones) and gaining the support of these states in the international community were also some of China’s main foreign aid motivations. According to Chinese leaders, national liberation fights were no longer a product of capitalist revolutions but a piece of socialist revolutions, and China should align with these countries in their fights (Wenping 2010, 140). For example, during Algeria’s struggle for independence, some French authorities stated that they could consider recognising China, provided that it stopped giving aid to the Algerian liberation movement (Wenping 2010, 140). The Chinese deputy premier and foreign minister, Chen Yi, replied that they could wait for this recognition, but that they would continue their support until Algeria gained its independence (Wenping 2010, 140). As a result, Algeria received approximately $28 million in material aid and some grants from China during the armed struggle (Wenping 2010, 140).
Immediately after the Bandung Conference, China was in favour of necessary initiatives for diplomatic recognition, especially with the support of the North African states. Following this recognition, these states began to benefit from Chinese foreign aid. In 1956, Egypt became the first country on the African continent to benefit from Chinese foreign aid, while at the same time enjoying the support of Chinese Premier Zhou Enlai in its claims to the independence of the Suez Canal (Zeng 1999). Another similar example was between the Mauritanian delegation visiting China in 1971 on Mao’s invitation and China distributing $20 million of interest-free loans to Mauritania thereafter (Copper 1976, 113). In return, Mauritania played an active role in drafting the 1971 Albanian Resolution, which called upon the UN to reclaim the lawful rights of the People’s Republic of China and opposed the Taiwanese side (Digital Library, UN 1971).
Pragmatist, Two-Way Foreign Aid of the Deng Era
The Deng Xiaoping administration triggered a series of changes to China’s foreign policy and economy, which shaped Chinese foreign aid in subsequent years. Examining the economic roots of that period before understanding the details of foreign aid motives can provide a valuable contribution to related literature. While utilising the links between Maoist and Leninist ideologies to preserve state authority, Deng also transformed into a market-oriented economy, diminished state control and paid more attention to free trade (Jiantao 2010, 181–90). Deng Xiaoping was impressed by a more pragmatic world view due to his globalist understanding instead of an ideological-based approach as before (Keith 2017, 1–2). Due to this divergence of opinions, Deng Xiaoping believed that international peace and stability were vital to China, especially for the continuation of China’s economic growth. More importantly, under Deng Xiaoping’s administration, China gave up support for overseas revolutionary movements, which obscured Chinese aid economically (Womack 1987, 497–507).
Economic Roots of the Period
In order to understand the Chinese economy during the Deng Xiaoping era, it would be worthwhile to start with the programme of readjusting, restructuring, consolidating and improving, which was announced at the National People’s Congress in 1979. The readjusting process could be considered the initial steps of China’s economic integration with the outside world. As state investment shifting to more productive sectors boosts economic growth (Bramall 2008, 331), decreasing government spending (National Bureau of Statistics of China, n.d.-c) was accompanied by readjustment and liberalisation process, including a rising number of collective and individual-owned industries. 9
Within the scope of the readjustment policy, Special Economic Zones were established, which carried investment and production mechanisms to a different dimension through multinational companies. 10 The establishment of these zones signalled not only economic benefits to China but also confidence that its rise would not be offensive or destructive. Finally, the balance between light industry and heavy industry tilted in favour of the former. In this way, the production of industrial consumer goods and non-grain agricultural products increased, and standards of living improved (National Bureau of Statistics of China, n.d.-b).
From the mid-1980s, Deng made greater efforts to consolidate the market-oriented socialist structure of the Chinese economy. Although his administration paved the way for certain liberal initiatives, such as foreign-capital initiatives, individual ventures and joint ventures, he also strongly emphasised the continuation of socialist public ownership (Murphy 2013). During this period, Chinese decision-makers took several critical steps that would lay the foundation for China’s long-term growth. The decollectivisation of agriculture and some liberal initiatives, such as the abolition of price controls and the acceleration of the opening-up policy, continued until the end of the 1990s. Furthermore, China began to follow a slightly more decentralised path in terms of fiscal policies and decision-making mechanisms, along with gradual integration into global trade, elaborate stretching of the control mechanism in the private sector, the enhancement of the urban industry and the baochan daozu system, also known as the household responsibility system, which was designed to organise the workforces of various collectives (Wang 2021, 227).
In the 1990s, the Chinese economy continued its rapid rise. It began to need more energy and raw materials for its booming economy, in addition to new markets for its prodigious manufacturing sector. Foreign aid began to play a vital role both in facilitating the supply of new resources for China and finding new markets to export its products. This growing influence in the international community divided Chinese leaders in two. On the one hand, they saw the concept of global governance and the attribution of ‘responsible stakeholders’ as a policy of containing China, while others described it as an important opportunity for China to make a difference in the international economic and political system.
To summarise Deng Xiaoping’s approach based on performance management, provable decisions rather than ideology, reasonable goals and calculable outcomes rather than irrational behaviour of collective motivation and facts rather than falsified news (LSE Ideas 2017, 5) were developments that laid behind his successful economic and political rule. Statistically speaking, economic growth in China averaged around 9% between 1978 and 1983, while growth averaged around 12% between 1991 and 1996 (despite some budget deficits and inflation between 1983 and 1990, it remained around 9%; LSE Ideas 2017, 5). An important effect of Deng’s reforms was to expand growth and production in different parts of the country. For example, while staple food production such as grain, meat and eggs increased by more than 30% from 1977 to 1984, peasant income was estimated to have doubled (LSE Ideas 2017, 5).
Foreign Aid Motivations of the Period
Foreign aid might be well positioned for Deng Xiaoping’s open-door policy and reform process, considering its area of utilisation for other countries. It could be considered both as a useful application of the argument for China’s peaceful rise and as a unique opportunity to realise the slogan of ‘mutual benefit’. The diplomatic gains of foreign aid, even in the Mao era, were briefly mentioned above when a more closed political structure and a centralised management approach prevailed. Moreover, China became an important player in the current international economic relations networks due to its foreign aid mechanism, easier access to various markets globally and export of a system with its own characteristics.
Deng Xiaoping focused on more material and pragmatist goals such as technical and technology transfer in foreign aid, not applying the conceptual pillars left by Mao that were self-reliance, minimising dependency and transforming the capitalist international system (Kim 1993, 26). In this way, China received so much foreign aid from developed countries that being a beneficiary of foreign aid became a motivation for giving foreign aid. 11 More specifically, Deng and his management were aware of the contribution of external financing to their development ideals. In this way, they could both transfer the development strategy they pursued by making use of this aid to other countries, and receive more aid as a committed member of international aid mechanisms.
Another motivation for foreign aid during the Deng period was diplomacy. In those years when the threat of the United States and the Soviet Union prevailed, foreign aid functioned as a useful foreign policy tool for China to create a more stable international environment (Brautigam 2009, 52). Moreover, foreign aid could contribute to China’s struggle against capitalist, colonial and hegemonic powers (Brautigam 2009, 52). China’s unique aid mechanism has given it an advantage in its struggle with these powers, as it offers a new, prudent and bilateral alternative for small states. Finally, the Chinese government added a moratorium clause to foreign aid contracts and ensured that this aid funding would also contribute to the modernisation of China due to the pressure of domestic political motives (Brautigam 2009, 52).
From the 1990s onwards, China focused on concessional loans with the establishment of the Export-Import Bank (EXIM Bank) and the China Development Bank. Acting as an intermediary between recipient countries and financial markets, these two financial institutions facilitated trade opportunities by providing market access for Chinese firms. The Angola Model, which is a model of commodities-for-concessional loans, also operated through the EXIM Bank and enabled China to get precious raw materials and natural resources (Trinidad 2013, 35).
Continuities and Changes in Traditional Chinese Foreign Aid
In the above sections, in order to better analyse the foreign aid of the Mao and Deng periods, first the development and economic growth strategies and models of the periods were examined, and then the foreign aid motivations of the periods were mentioned. This section aims to provide a holistic framework by combining the above conclusions with foreign aid processes. What the study mainly observes is China’s steadfast pursuit to distribute a significant amount of foreign aid in most of the relevant periods, despite the founding process of the Republic, the subsequent socio-economic stalemates and disasters and the transformation that started with the Deng period.
Despite the birth pangs of the new state and some socio-economic problems, such as the lack of capital, a high level of backwardness and a lack of confidence in the new administration and its governance, China sought foreign aid in the early Mao era for ideological and security reasons. During the Korean War, China, which provided approximately $280 million in material aid to North Korea, also provided approximately $300 million in grants between 1954 and 1957 after the war (Ping 1999, 165). China provided approximately $67 million in grants to Vietnam, another communist country, between 1950 and 1954 (Ping 1999, 165). China’s highly generous aid to these countries committed to communist ideology in the face of upheavals on the flanking fronts of the Cold War was critical, even though assistance was obviously a burden for the Chinese economy at a time in which it could not accumulate capital, and the transition to a socialist economy was incomplete as shown before.
Notwithstanding the Great Leap Forward disaster and the social collapse caused by famine, China increasingly began to distribute foreign aid, especially to African countries. While 31 countries benefited from Chinese foreign aid in 1970, 36 new countries, 27 of which were African countries, began to receive Chinese foreign aid between 1971 and 1978 (Zeng 1999, 83). In the same period, the ratio of aid distributed by China to its total government expenditure varied between 5% and 8% in some years (Chang and Halliday 2006, 586). This rate points to a statistic that has been rare in history. Furthermore, between 1950 and 1985, China provided almost $17 billion in foreign aid, of which 6.6% was in cash, to 87 countries, more than half of which were African countries (Ping 1999, 169). This amount of foreign aid corresponded to 1.7% of China’s total government expenditure and the construction of approximately 1,126 projects (Ping 1999, 169). In short, it is essential to note that ideological and diplomatic-based foreign aid motivations outweighed the current economic conditions in the Mao period.
Deng’s administration concluded that foreign aid expenditures in the Mao period were unnecessarily generous, and that expenditures should be reduced in order to achieve lasting economic growth (Copper 2016, 79). According to him, many of these states did not even need this foreign aid, which was a burden on the Chinese people. In addition, Chinese officials had deep concerns about the effectiveness of aid, especially considering the first communist beneficiary countries, such as Albania, North Vietnam and North Korea (Copper 2016, 79).
Under Deng’s rule, Chinese foreign aid, in addition to decreasing in the first years, reached a certain standard and developed a more rational structure (Copper 2016, 79). An example of this rational dimension was the use of foreign aid as a handy tool of foreign policy (Copper 2016, 80). However, this transformation was not only functional but structural. It was emphasised that one-way foreign aid was not viable for poor countries (Ke 1983), and hence the necessity of a two-way aid policy was adopted. 12 Thus, the fast-growing Chinese economy under Deng’s administration also supported foreign aid motivations, and Chinese foreign aid took on a more pragmatic, two-way and corporate character.
Conclusion
The study has discussed the economic sources and motivations of foreign aid under former Chinese leaders Mao Zedong and Deng Xiaoping. It has been observed that although China experienced very difficult economic times during the Mao period, foreign aid motivations were strong, and therefore the amount of foreign aid increased almost every period. On the other hand, consolidating economic resources became a priority for the Deng administration, which thought that the foreign aid made during the Mao period was not spent on a rational and meticulous basis. However, since the mid-1980s, with the global espousal of the liberal approach, foreign aid motivations once again gained weight in China under Deng’s administration, which realised the merits of foreign aid mechanisms. The difference between the two periods is that Deng Xiaoping, who built a socialist and closed economy more effective with capitalist nuances, was able to address foreign aid motivations more easily with the help of bright economic indicators.
Another remarkable point is that China has benefited from the foreign aid mechanism to a great extent in a significant part of its history. In addition, China has gained considerable experience both as a donor and as a recipient. Chinese foreign aid also reached a more modern and systematic structure, with the EXIM Bank of China and the Development Bank of China established in 1994. With the establishment of these two commercial banks, Chinese aid and investment have shifted significantly to more productive sectors and infrastructure (Morgan and Zheng 2019, 1294–95). While Chinese foreign aid continued to support the social sectors in the recipient countries, grants and interest-free loans were replaced by more concessional loans, and commercial relations between the donor and recipient countries gained importance. Since the 2000s, Chinese aid has taken on a structure that supports strategic industries, attaches importance to human development and paves the way for state intervention in markets at a tolerable level for self-directed development (Babaci-Wilhite et al. 2013, 738). These practices have been a rehearsal for the global investment and infrastructure programmes that China carries out today and contain important lessons about China’s aid mentality.
Footnotes
Acknowledgements
First, the author would like to thank his dear supervisor, Dr Wang Dong, for her enlightening and guiding comments, and then he would like to thank his family and all his dear friends who are always with him.
Data Availability Statement
All data is collected from publicly available sources
Declaration of Conflicting Interests
The author declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.
Funding
The author received no financial support for the research, authorship and/or publication of this article.
Notes on the Contributor
The research interests of the author include China’s foreign economic assistance, Turkish foreign policy and theories of international relations.