Academic journal article Policy Studies

China and the United States as Aid Donors: Past and Future Trajectories

Academic journal article Policy Studies

China and the United States as Aid Donors: Past and Future Trajectories

Article excerpt


The Trump administration's 2018 budget proposes to cut US foreign aid by one third, making it the largest cut in foreign aid since the end of the Cold War. It also comes at a time when China is using its aid program and other official flows to assert its influence across Asia and Africa, most recently with its Belt Road Initiative. For the United States to cut its aid program so drastically at this critical juncture will effectively cede the field to China after a decades-long "aid race" in which each vied for influence in the Global South using the "softpower" of foreign aid. An exploration of this history will shed light on why a continued and strong foreign aid engagement with the Global South is important.

First, it will be useful to map the origins of both foreign aid programs and show how they developed up to the 1980s. An important aspect of this is China's development leadership of the Global South, particularly in the 1970s when the West was challenged by UNCTAD, the New International Economic Order, and more assertive Southern voices. The 1990s and the 2000s saw China cement its political solidarity relationships with economic ones at a time when the United States largely ignored China and focused on democratization (mainly in Eastern Europe) and the War on Terror. This discussion provides an important background for a discussion of how the Trump administration's aid cuts limit the use of the US aid program in better engaging with China and the Global South to strengthen and advance some of the liberal values that are under threat by rising nationalism. Instead, China's hands-offapproach to bilateral relations will go unchallenged in an era of growing authoritarianism.

An Overview

The rise of the United States and China as foreign aid donors, the United States from the mid-1940s and China from the mid-1950s, followed surprisingly similar paths but with some important differences. While the United States as a modern bilateral donor1 had its origins in the immediate post-World War II context, with an aid program to Turkey and Greece in 1947, and President Truman's Point Four Program in 1949, the US aid program did not increase substantially until the mid-1950s when the Soviet Union started a foreign aid race to build alliances to complement the arms race. Similarly, until the late 1980s the US program was an adjunct to the Cold War, and the foreign aid program complemented the US security strategy by developing and cementing Cold War alliances. In the early 2000s the US aid program expanded again with its focus on the War on Terror.

For China, the Asian-African Conference in Bandung, Indonesia, in April 1955 marked its first step in establishing a foreign aid program beyond support for its immediate communist neighbors. Bandung was also the first step by developing countries, acting as a collective group, in articulating their own development cooperation agenda, marking the beginning of South-South cooperation. China immediately took up the challenge, beginning a foreign aid program to Egypt in 1956.

The Chinese aid program, after a few halting steps in the 1960s, grew rapidly from the early 1970s until it stabilized in the 1980s, then grew rapidly again from the 1990s until the present day. From the 1990s, the focus of the Chinese program shifted from cementing political and diplomatic relationships to more direct economic cooperation to build strategic partnerships, culminating in the 2010s with the Belt Road Initiative (BRI) across Asia and Africa, using a mix of foreign aid, other official flows, and foreign direct investment (FDI).

For both the United States and China, their foreign aid programs, while ostensibly about Third World economic development, were very much driven by their respective national interests. For the US, Cold War rivalry meant that building alliances and protecting allies was a central part of its aid program in its early years. For China, it was a pathway to regaining its status as a respected voice on the global stage after what Zhou Enlai in the 1950s referred to as the "century of humiliation," and then to building economic ties to realize Xi Jinping's China Dream, a reference to China's former glory. …

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