New leader on foreign aid front

Pakistan set to become biggest recipient of Chinese aid

China seems poised to become the leader of international development activities as the United States and Europe appear to be retreating from their international aid responsibilities.

At the 2015 UN Sustainable Development Summit in New York, China had pledged $2 billion to help implement the SDG agenda and Beijing is among the fastest to deliver on its commitment.

Having lifted some 470 million of its own citizens out of extreme poverty between 1990 and 2005, China is said to possess not only the tools to become a leading international developer, it also has the relevant experience. And more than anything else, China seems to have grabbed the political opportunity offered to play a bigger role in international donor activity.

Since the turn of the century, China is estimated to have disbursed nearly as much aid as the United States, but has kept this activity low-key and more or less far from the international glare.

The second highest recipient of Chinese foreign aid between 2000 and 2014 was Pakistan at $24.3 billion, followed by Angola at $16.6 billion. In the same period, Russia was ranked at the top of the list of Chinese aid recipients at $36.6 billion. Over the next ten years, Pakistan is likely to displace Russia from its top position of Chinese aid recipients as Islamabad is expected to consume as much as $60 billion of Chinese flows between 2017 and 2027 absorbing around a billion dollars a year on an average.

Chinese foreign aid to Pakistan is a mix of two varieties — grants plus concessional loans and commercial loans — with the official flows predominating while Russia gets almost exclusively the latter category — and is mostly about getting the thirsty Chinese economy access to Russia’s huge reserves of oil.

Total Chinese foreign aid between 2000 and 2014 of $354.3 billion to 140 countries and territories was not far behind the US total of $394.6 billion, though the types of projects the aid funded were on the whole vastly different.

Interestingly, China seems to be beating the US at its own game without perhaps lifting a finger as since President Trump’s election America seems to be going back to the good old coal days for energy while China is being seen making massive investments in electric vehicles.

According to a Washington Post column, China’s leaders have let it be known that by 2025 they want 20% of all new cars sold in China to be powered by alternative fuels. All of this has already translated into jobs.

According to a recent UN report China has invested $78.3 billion in renewable energy in 2016 which is estimated to be almost twice as much as the US. In 2015, China was producing the largest numbers of wind-turbines and solar-panels while keeping the costs under control with generous government subsidies.

China is pumping billions into developing artificial intelligence (AI) in an effort to dominate the industry, according to the Financial Times. And it’s not clear whether the US will have the resources to keep up.

Both countries are ploughing money and talent into AI, but Beijing’s blueprint for investing in artificial intelligence underlines its desire to beat Washington.

“‘When it comes to government data, the US doesn’t match what China collects on its citizens at all,’ says James Lewis, senior fellow at the Centre for Strategic and International Studies. ‘They have a big sandbox to play in and a lot of toys and good people.’”

“China’s checkbook is also unmatched in the US, where budgets are being cut. ‘The Chinese invest billions, we [the US] spend millions. It’s hard to see how you win it when you are being outspent a thousand to one.’”

Published in The Express Tribune, October 21^st, 2017.

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