SINO - U.S. FOREIGN AID
(i) The rise of foreign aid in the United States and China
The United States has a long history of foreign assistance, which has been one of the central ways in which it engages in global affairs and serves its national interests since the early twentieth century. For more than half a century, foreign assistance has constituted a key form of U.S. engagement in developing countries. To advance its own interests, the United States has provided a wide range of support, including economic assistance, humanitarian assistance, and military assistance in a variety of forms.
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In 1949, then President Harry S. Truman proposed the "Point IV Program" to provide economic and technical assistance to underdeveloped regions in Asia, Africa, and Latin America, marking the beginning of U.S. assistance to developing countries in the true sense of the word. 1961, President Kennedy consolidated all non-military security assistance and aid programs into a new agency, the U.S. Agency for International Development (USAID), marking a major reform of the U.S. foreign assistance system and making assistance more specialized and systematic. Development Agency (USAID), which marked a major reform of the U.S. foreign aid system, with more specialized and systematic assistance. Into the 21st century, U.S. foreign aid policy remained active and was constantly adjusted in response to changes in the global political and economic situation. After the Biden administration, the international affairs budget was significantly increased in his first presidential discretionary budget. Estimated on a year-on-year increase basis, U.S. economic assistance in FY2022 will be about $36.6 billion, military assistance about $17.2 billion, and overall foreign assistance could reach $53.8 billion, a 12 percent increase from the previous fiscal year.
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Figure 1: U.S. Foreign Aid as a Percentage of GDP
Source: The Atlantic Monthly
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The dynamics of U.S. foreign economic assistance have changed significantly in recent years, especially in the context of a complex and volatile global geopolitical context. Aid allocation has become more selective, with a greater preference for programs that align with U.S. strategic interests. At the same time, humanitarian assistance continues to occupy an important place in responding to urgent needs such as conflicts and climate disasters. Health and humanitarian are traditional areas of U.S. economic assistance advantage, and in recent years the two have accounted for more than 50 percent of total economic assistance. The FY 2022 budget allocations for the humanitarian and health budgets of the Agency for International Development (AID) ranked first and third, respectively, which can be seen in its strategic intent to safeguard U.S. hegemony in the global humanitarian and health fields and to consolidate U.S. discourse and influence in the areas of global governance in which the U.S. enjoys an advantage. The United States Agency for International Development (USAID) has invested heavily in humanitarian and sustainable development initiatives to promote resilience-building in less developed regions while responding to current crises. These trends indicate that United States foreign assistance policy is gradually evolving in a more integrated and strategic direction.
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Against the background of the special era of the cold war between the United States and the Soviet Union in the 1950s, China stood firmly on the side of the socialist camp and actively provided assistance to foreign countries, first and foremost highlighting its unconditional ideological support for brotherly socialist countries and the spirit of proletarian internationalism. As the international situation changed, the scope of China's foreign aid was gradually expanded, and it began to provide assistance to Asian and African nation-states. By 1963, China's recipient countries had reached 21, and the modes of assistance had become more diversified, including material assistance, technical assistance and complete sets of projects. Such assistance not only promoted the economic development and social progress of the recipient countries, but also deepened the friendship and cooperation between China and those countries.
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In recent years, China's foreign aid has developed rapidly, including the provision of funds, technology, materials and personnel training, and has become an important force to be reckoned with by the international community. China's foreign assistance is mainly based on the frameworks of South-South cooperation and the Belt and Road Initiative, aimed at promoting economic cooperation and common development among developing countries. The Belt and Road Initiative focused on infrastructure development and investment in various fields in Asia, Africa and Latin America, and such assistance not only helped recipient countries to improve their infrastructure and productive capacity, but also promoted bilateral trade and investment cooperation.
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Figure 2: China's Belt and Road Initiative
Source: World Bank
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Through a series of programs, China has provided extensive and in-depth assistance to a number of recipient countries, injecting strong impetus into their economic and social development. As of 2019, China has provided nearly RMB 400 billion in assistance to 166 countries and international organizations, dispatched more than 600,000 aid workers, and more than 700 people have sacrificed their precious lives for the development of other countries; announced unconditional debt forgiveness for matured government interest-free loans to China by heavily indebted poor countries (HIPCs) and least developed countries (LDCs) on seven occasions in succession; and provided medical assistance to 69 countries in Asia, Africa, Latin America and the Caribbean, and Oceania; and has provided assistance to more than 120 developing countries for the implementation of the United Nations Millennium Development Goals (MDGs). It has actively provided medical assistance to 69 countries in Asia, Africa, Latin America and the Caribbean, and Oceania, and has helped more than 120 developing countries implement the United Nations Millennium Development Goals.
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Figure 3: China's Foreign Aid Expenditures
Source: Johns Hopkins Institute for Central African Studies
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In its foreign aid projects, China emphasizes cooperation and exchanges with recipient countries to jointly promote project implementation. Among them, infrastructure construction projects under the Belt and Road Initiative are an important part of China's foreign assistance. These projects not only improve the transportation and communication conditions of the recipient countries, but also provide them with more development opportunities and employment opportunities. In addition, the Forum on China-Africa Cooperation (FOCAC) is also an important platform for China's foreign aid. Under the framework of FOCAC, China has provided African countries with a wide range of assistance covering infrastructure construction, medical and health care, education, human resources development and other areas. These assistance projects have not only upgraded the economic and social development of African countries, but also strengthened the friendship and cooperation between China and Africa.
(ii) Comparative analysis of foreign aid from China and the United States
Differences in aid philosophy and objectives
There are significant differences between U.S. and Chinese foreign aid in terms of philosophy and objectives. U.S. aid often has a strong political color and strategic intent, aiming to promote goals such as democratic governance, market access and regional stability through aid. China's aid, on the other hand, is more focused on effectiveness and mutual benefit, aiming to promote economic development and improve people's livelihoods in recipient countries.
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In addition, U.S. aid tends to emphasize "recipient responsibility" and "transparency", requiring recipients to assume certain obligations and responsibilities while receiving aid. The Millennium Challenge Corporation (MCC), established in 2004, is one of the U.S. professional aid departments, which is famous for setting stringent political and economic conditions for the selection of recipients and providing large-scale and long-cycle "aid packages," forcing developing countries to reform themselves in terms of the U.S.-determined criteria such as the market economy, democratization, human rights, etc., in order to receive aid. China's aid, on the other hand, is much more flexible and flexible. China's aid, on the other hand, is more flexible and inclusive, emphasizing friendly cooperation and mutual understanding with recipient countries. This difference affects to some extent the selection and implementation effects of aid programs on both sides. China's foreign aid policy also reflects its unique culture and values. For example, China emphasizes the principle of "joint construction and sharing" and encourages recipient countries to actively participate in the planning, construction and operation of aid projects. This participatory development model not only enhances the ownership and responsibility of recipient countries, but also promotes friendly relations and mutual understanding between the two sides. Through an expanding network of multilateral frameworks, China is increasingly strengthening its influence in various regions. By engaging partner countries in cooperative governance structures, rather than relying solely on unilateral aid support, a mutual development aid model has been fostered.
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Comparison of forms and means of assistance
United States assistance tends to focus on loans, grants and technical assistance, emphasizing the long-term benefits and sustainability of projects. China's assistance, on the other hand, tends to be more oriented towards areas such as infrastructure construction, industrial development and human resources development, emphasizing the promotion of economic transformation and upgrading and industrial upgrading in recipient countries through assistance.
In addition, U.S. assistance also focuses on implementing projects through such channels as non-governmental organizations and the private sector in order to enhance the efficiency and effectiveness of assistance. China's assistance, on the other hand, relies more on inter-governmental cooperation and state-owned enterprises and other channels to implement projects, and this type of cooperation has, to a certain extent, strengthened political mutual trust and the basis for cooperation between the two sides.
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(iii) Assessment of and response to the United States aid policy towards China
The China-Pakistan Economic Corridor (CPEC) is the largest project in the Belt and Road Initiative (BRI), with an infrastructure plan totaling approximately $54 billion that stretches from the Xinjiang region of China to the port of Gwadar on Pakistan's south coast, and includes roads, railroads, electricity, telephones, and IT networks. The Gwadar port is arguably the most important component of the Belt and Road Initiative (BRI) in Pakistan, with the potential to become an alternative shipping lane to the Strait of Malacca. The Global Development Initiative (GDI) was launched by President Xi Jinping in 2021 to promote economic cooperation and sustainable development among developing countries. The initiative aims to address issues such as poverty reduction, infrastructure development, food security and sustainable development, and is often seen as complementary to frameworks such as the Belt and Road Initiative.
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Figure 4: Map of the China-Pakistan Economic Corridor Project
Source: Eurasian Society for System Sciences
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The United States is also increasingly concerned about China's foreign aid policy. The United States believes that China's aid policy threatens its global strategic interests and geopolitical position to a certain extent. The United States believes that China's aid policy has the following characteristics: first, it focuses on practical results and mutual benefit; second, it emphasizes the implementation of channels such as intergovernmental cooperation and state-owned enterprises; and third, it focuses on promoting the economic development and industrial upgrading of recipient countries. These characteristics make China's aid policy more competitive and attractive to a certain extent. At the same time, the United States Government has also suggested that there are some problems and challenges with China's aid policy that may adversely affect the long-term development of recipient countries.
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The United States has taken a skeptical and negative view of China's economic strategies in recent years, interpreting these policies as attempts to expand China's geopolitical influence at the expense of democratic governance and economic independence in developing countries. U.S. officials claim that China's financial assistance will lead to increased dependence on developing countries, potentially undermining their sovereignty and aligning them more closely with China's political interests. The United States defines China's behavior as part of a broader strategy to counter U.S. influence globally, particularly in areas traditionally considered U.S. spheres of influence. Accordingly, the U.S. has implemented several countermeasures: first, it has strengthened its alliances, and it has sought to strengthen alliances with countries in Asia, Africa, and Latin America to promote alternative development models that emphasize transparency and democratic governance. The United States then strengthened its foreign aid program, including by focusing on sustainable development projects that responded to local needs while avoiding unsustainable debt burdens on less developed regions. The United States Government has expanded its engagement in diplomacy, encouraging multilateral cooperation among allies to counter Chinese influence, while emphasizing the debt dependency and governance issues associated with BRICS projects.
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Foreign aid is a complex political and economic act. From a political point of view, foreign assistance is a manifestation and extension of political relations among countries. By providing assistance and support, a country can strengthen friendly cooperation and mutual understanding with other countries, thereby safeguarding its global strategic interests and geopolitical position. From an economic perspective, foreign aid is one of the most important means of promoting economic development and improving the livelihood of developing countries. By providing support in the form of funds, technology, materials and personnel training, donor countries can help recipient countries to improve their productive capacity and level of development, thereby realizing rapid economic growth and overall social progress.
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With the continuous development of globalization and multilateralism, the future trend of foreign aid will be characterized by the following: first, the continuous expansion and diversification of the scale of aid. With the development of the global economy and population growth, the demand for foreign assistance will continue to increase. At the same time, the forms and modes of assistance will become more diversified and flexible to suit the needs and circumstances of different recipient countries. The second is the establishment and improvement of the mechanism for evaluating the effectiveness of aid. In order to improve the effectiveness and efficiency of aid, countries will establish a more comprehensive evaluation mechanism to monitor and assess the implementation effectiveness and contribution of aid programs. This will help to better understand the needs and situation of recipient countries so as to provide more effective assistance and support. Thirdly, international cooperation and coordination will be strengthened. As globalization and multilateralism continue to develop, cooperation and coordination among countries will become even more important. By strengthening international cooperation and coordination, countries can better address global challenges and problems together and promote sustainable global economic development and comprehensive social progress.
References:
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https://www.csis.org/analysis/responding-chinas-growing-influence-ports-global-south
https://www.ide.go.jp/English/Data/Africa_file/Manualreport/cia_10.html
https://global.chinadaily.com.cn
https://chinapower.csis.org/china-belt-and-road-initiative/
https://thediplomat.com/2020/04/the-belt-and-road-after-covid-19/
https://www.state.gov/about-us-office-of-foreign-assistance/
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