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6 - Aid à la Carte

The Subnational Distribution of Chinese Development Finance

Published online by Cambridge University Press:  21 April 2022

Axel Dreher
Affiliation:
Universität Heidelberg, Heidelberg, Germany
Andreas Fuchs
Affiliation:
Georg-August-Universität, Göttingen, Germany
Bradley Parks
Affiliation:
William & Mary, Virginia
Austin Strange
Affiliation:
The University of Hong Kong
Michael J. Tierney
Affiliation:
William & Mary, Virginia
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Summary

This chapter investigates the motivations of recipient governments who seek out Chinese development projects. We examine how host country leaders shape the ways that Chinese development finance is allocated across subnational jurisdictions. First, we evaluate whether China’s allocation of aid and debt within countries flows to areas with higher levels of socioeconomic need. Second, we explore whether political leaders manipulate incoming financial flows from China to advance their own political interests. We do so by examining whether and when funds from Beijing favor the home provinces of political leaders. Finally, we compare and contrast the ways in which Chinese and World Bank development projects are subnationally distributed. To do so, we assign latitude and longitude coordinates to the specific locations where China implemented its de- velopment projects. Our findings indicate that Chinese development finance does not go to the geographic areas within recipient countries where it is most needed: much of it ends up in wealthier provinces. In addition, Chinese development projects favor politically privileged jurisdictions: the home provinces of political leaders receive substantially more Chinese development finance in countries with competitive elections, and even more at election time. This is a problem from a development perspective because the average home province of a political leader is significantly wealthier than the rest of the country.

Type
Chapter
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Banking on Beijing
The Aims and Impacts of China's Overseas Development Program
, pp. 159 - 191
Publisher: Cambridge University Press
Print publication year: 2022

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