JICA Research Institute Releases an Update on the Estimation of China's Foreign Aid

A new working paper by Kitano estimates China’s foreign aid between 2001 and 2014 as a proxy for Official Development Assistance (ODA) defined by OECD-DAC. The author updated his previous work (Kitano and Harada 2014 *) by refining an earlier estimation process, taking into consideration the expected annual growth rate of China’s foreign aid and other points that needed to be modified. The result has afforded an unexpected view of China’s foreign aid. Net foreign aid is estimated to have not increased significantly. The estimates in 2012 and 2013 were significantly smaller than those offered previously, which were US$5.7 billion and US$7.1 billion, respectively.

Kitano in his paper explains the reasons behind this unexpected trend. Firstly, bilateral grants and interest-free loans were downwardly estimated partly because verification of feasibility studies on the part of the projects was insufficient. Secondly net disbursements of concessional loans witnessed a smaller rate of increase relative to the past trend. Thirdly multilateral foreign aid stopped increasing due to the fact that China had completed its share of the capital increase for the World Bank’s shareholding realignment.

Kitano also notes that China’s foreign aid is expected to increase and catch up with the top five DAC members in the foreseeable future. It is therefore important for the international community to carefully examine the magnitude of China’s foreign aid.