Measuring the volume of China’s foreign aid has sparked a huge debate about what should be counted as aid and what should not. Some foreign analysts and scholars just mix the government concessional loans with other commercial loans by the Export-Import Bank of China, China Development Bank and other commercial banks. Some have simply confused China’s foreign aid with investment. Consequently, they exaggerated a great deal the actual volume of China’s foreign aid. The financial resources for China’s foreign aid mainly include three types: grant (aid gratis), interest-free loans and concessional loans. From 2010 to 2012, China provided a total of 32.32 billion yuan worth of grants, accounting for 36.2% of its foreign aid volume; 7.26 billion yuan worth of interest-free loans, taking up 8.1% of its foreign aid volume and 49.76 billion yuan worth of concessional loans, accounting for 55.7% of its total foreign aid volume. The concessional loans are raised by the Export-Import Bank of China on the market, with the loan interests lower than the benchmark interest of the People’s Bank of China, the central bank， and the difference is covered by the State in the form of financial subsidies. At present, the annual interest rate of China’s concessional loans stands at 2% to 3%, and the period of repayment usually ranges from 15 to 20 years (including five to seven years of grace). It should be noted that China Development Bank doesn’t provide foreign aid at all, and the concessional loans granted by the Export-Import Bank of China are just one part of its business. Both banks support Chinese enterprises in conducting overseas businesses through offering commercial loans and providing financing and investment services. For example, in recent years, the Export-Import Bank of China financed the Ethiopian Oriental Industrial Park and the Ethiopian Railway Project; China Development Bank offered financial support to the Guangdong Guangken Rubber Group Co., Ltd. for the construction of its manufacturing/processing base in Southeast Asia, namely the Oman Salalah power Generation and Sea Water Desalination Project, and invested $198 million to support Wanbao Grains & Oils Co., Ltd in the construction of Mozambique Agribusiness Project, the largest one of its kind by China in Africa which can create an integrated chain from crop planting, food processing and warehousing to distribution. However, the funds offered for all the above-mentioned projects by the afore-mentioned banks are non-concessional development funds. They can’t therefore be counted as foreign aid at all.
Posted on: Tue, 12 Aug 2014 15:01:04 +0000
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