Welcome to the last issue of our resources round-up on China and global development for 2019. ODI is ending the year in style, hosting a delegation from the China International Development Cooperation Agency (CIDCA) at our office in London.
This month's round-up discusses the economics Nobel Prize, financing and engaging with the Belt and Road Initiative (BRI), and China's aid system.
Poverty alleviation: experimental methods and lessons from China
This year, the Nobel Memorial Prize in Economic Sciences was granted to three development economists for their use of experimental methods (such as randomised control trials) to alleviate global poverty.
In two articles published on Project Syndicate, Yao Yang and Yuen Yuen Ang point out that the insights provided by randomised control trials did not inform the Chinese experience of poverty reduction through economic growth. Yao Yang argues that the experimental approaches used by the Nobel Prize winners “might help policy-makers improve existing welfare programs […], but they cannot tell a poor country how to achieve sustained growth.”
Yuen Yuen Ang adds that China’s growth and poverty reduction experience was nonetheless accompanied by increased inequality and rampant corruption. While the two articles disagree on the key ingredient driving China’s economic dynamism, they share the view that economic growth remains the most powerful tool to fight poverty, as China’s experience has shown.
Financing the Belt and Road Initiative
In the past few months, several reports and articles were published on financing the BRI.
United Nations Development Programme (UNDP) China and the China Development Bank jointly authored a study on ‘Harmonizing investment and financing standards towards sustainable development along the Belt and Road.’ The report maps the different financial institutions involved in the BRI, the financial instruments used, as well as the frameworks and principles that have been – or could be – adopted. It also provides recommendations on how to harmonise these financial standards to guide investment along the BRI. This blog post includes a good review of the report, and points to other resources on China’s sustainable investment and financing.
Devex featured two articles on how financing the BRI is perceived differently by Chinese and non-Chinese actors. The first article explains that in the first five years since the launch of the BRI (2013-2018), the committed or disbursed amount for BRI projects amounted to $580-600 million, surpassing lending from multilateral development banks in the same period. While this sounds impressive, there can be a (very) large difference between committed and disbursed sums.
The second point raised by this article is that the Chinese government views the BRI as a global initiative, and that it welcomes other countries to contribute to it. However, Asian Development Bank president Takehiko Nakao expressed scepticism about the possibility of other multilateral lenders joining the BRI, which is perceived as a “unilateral initiative by China.”
The view from the ground
The journal Political Geography has published a special issue on China’s Belt and Road Initiative: views from the ground. This stimulating read contains articles on a wide range of countries, including Kazakhstan, Ghana, Nepal, and Fiji.
Two more ‘views from the ground’ are reports focussing on South Asia and the Pacific. The first is a study by Erica Downs at the Columbia Centre for Global Energy Policy on the coal power plants fuelling the China-Pakistan Economic Corridor (CPEC). The study highlights the “mismatch between the dominance of coal in the CPEC power generation mix and Beijing’s recent emphasis on green development as an important feature of the BRI.”
Raja, Dayant and Pryke at the Lowy Institute have published new findings on debt and the BRI in the Pacific. In line with many other studies, this analysis finds that there is no evidence for claims supporting a debt-trap diplomacy narrative (as I discussed in previous round-ups). However, the scale of China’s lending and its lack of strong institutional mechanisms to ensure debt sustainability pose clear risks, particularly for the small and fragile economies of the Pacific.
China’s aid management system
The UNDP provides a good overview of the changes in the governance system of China’s foreign assistance, comparing the set up before and after the establishment of the CIDCA.
The China Aid Blog posted about CIDCA’s new “Measures for the use of foreign aid logo,” aiming to increase the visibility of China’s aid. The use of the logo remains largely unchanged, except for the introduction of three new areas: medical equipment and medical teams, and projects funded through South-South Cooperation Fund and concessional loans.
Lastly, the Public Administration and Development Journal published a special issue on the BRICS and international development assistance. This includes old and new articles not only about China as a donor, but also about the other BRICS countries.
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