The alignment of development and foreign policy in China's evolving aid system

Foreign policy and developmental goals have been among the most prominent objectives of foreign aid. Over the last decade, China and a number of OECD countries have restructured their aid agencies in seemingly opposite directions, raising debates on aid and development. This chapter explores how China aligns development and foreign policy goals while reforming its aid system. It reviews three moves that drive China’s transition of aid system: the establishment of China International Development Cooperation Agency, the promulgation of the new White Paper, and the launch of the Global Development Initiative. The chapter analyses the evolution of aid distribution between bilateral and multilateral channels. It then compares the allocation of development finance between China and OECD DAC countries. The chapter finds that, despite the distinct structure of development finance, the allocation of development finance between China and DAC countries demonstrates similar patterns. Aid from China or DAC countries is more focused on poorer countries and bound with development-specific purposes, while other types of development finance are more market-oriented.