Thursday, November 5, 2015

FT story on Chinese aid: bias or ignorance?

On October 29, Shawn Donnan at the Financial Times wrote a story, "China's aid splurge fails to bridge credibility gap in Africa," that betrayed a significant lack of understanding of how China’s overseas development finance operates.

The FT story summarized "Listening to Leaders," a new report from AidData that purported to measure the usefulness of policy advice offered by development partners in low and middle income countries (ahem: not just Africa).

Few policymakers … trust China’s advice,” Donnan writes. The press release from AidData seemed to seems to back this up:
The Listening to Leaders report also provides evidence that the popular narrative about China’s expanding soft power – in particular, the notion that the “Beijing Consensus” is rapidly eclipsing Western sources of influence in the developing world – is probably overblown. When asked to rate the usefulness of China’s policy advice, developing country leaders ranked China Development Bank, China Ex-IM Bank, and Chinese Embassies 75th, 59th, and 70th, respectively, out of 86 bilateral and multilateral development finance institutions
Whoa, Nelly! What did the AidData researchers really find? Actually reading the report and the appendices provides a different spin on this research.

China’s policy of non-interference makes Chinese officials reluctant to dispense any policy advice at all. Not providing advice is quite different from providing untrustworthy advice.

The survey included 6731 respondents.  Only 326 (less than 5%) were able to comment on the usefulness of any policy advice from the Chinese embassy, while only 102 (1.5%) had an opinion on the usefulness of any policy advice from China Ex-Im Bank, and 56 (less than 1 %) gave a grade to any policy advice from China Development Bank. This suggests that very little advice was being given. Compare this with 1486 who were able to rate advice from the World Bank, 1227 from UNDP, and 984 from USAID.

These are very small numbers on which to say "few policymakers ... trust China's advice." Rather, we should be reading: "few policymakers get advice from China."

Deep in the appendices of the study, we read that the Chinese appear to be giving substantive advice in just one policy domain:  trade -- which is not primarily an internal affair.

Here, the Chinese embassy was rated as #2 among development partners in the usefulness of its policy advice. And this advice helps explain why China-Africa trade rose from $10 billion in 2000 to $220 billion in 2014.

So why didn't we get a headline with this spin: policymakers give high ratings to Chinese advice on trade?

A few other points on how the research was conducted, and how it is being described.
  • China Development Bank, China Eximbank, and Chinese embassies are lumped into a big group and described as "aid agencies." (China does not have an official aid agency, and China Development Bank, in particular, only gives commercial loans). Most Chinese finance provided to other developing countries is not official development aid, but trade finance: export credits. 
  • While the research is described as the opinion of "developing country leaders,"the appendix reports that 1,469 of the people surveyed actually came from the development partner community itself. Not sure yet if these respondents were included in the "usefulness of advice" opinions.
  • At one point, the authors make a somewhat snide comment: "Despite soaring rhetorical commitments, existing evidence suggests that neither China nor Brazil have much influence on government decision-making in Africa’s agricultural sector." But are China and Brazil trying to have influence on "government decision-making"? 
As evidence, the report cites a policy brief we (SAIS-CARI) published on Chinese training courses for African officials, by Henry Tugendhat. Yet the policy brief did not discuss policy influence -- it described 3 week long agricultural technology training courses offered in China. Tugendhat writes: "These courses aim to facilitate the transfer of knowledge and technology, increase trade opportunities, foster stronger political and economic relationships, and present a positive image of China. The courses appear to be achieving these goals..." 

*The survey asked about "23 policy domains, which were then aggregated into four policy areas: economic (macroeconomic management; finance, credit, and banking; trade; business regulatory environment; investment; labor; energy and mining; and infrastructure), governance (land, decentralization, anti-corruption and transparency, democracy, civil service, justice and security, tax, customs, and public expenditure management), social and environmental (health, education, family and gender, social protection and welfare, environmental protection, and agriculture and rural development), and general (foreign policy and general policy)." Aside from trade, there was no indication of any policy domains in which respondents actually received advice from China or Chinese banks.

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