One of the most important contributions of China’s relations with developing countries is that its non-interference approach provides developing countries the opportunity to deal with their internal issues without intervention. In order to understand the distinguishing features of China’s approach to dealing with developing countries, it is important to look at the pillars of its policy of engagement. 

The Bandung Conference of 1955, which took place in Indonesia, was the catalyst to China’s relations with developing countries in that first period.  It brought together twenty-nine countries – twenty-three from Asia, two from Northern Africa (Egypt and Libya) and four from sub-Saharan Africa (Ethiopia, the Gold Coast (now Ghana), Liberia and Sudan) – to promote economic and cultural cooperation, and to oppose European colonialism and the United States/Soviet Union imperialism. 

The main outcome of that conference was the Ten Bandung Principles, which essentially built on the Five Principles of Peaceful Coexistence that had been agreed by China and India as part of the 1954 Sino-Indian Treaty. The Five Principles of Peaceful Coexistence – mutual respect for each other’s territorial integrity and sovereignty; mutual non-aggression; mutual non-interference in each other’s internal affairs; equality and cooperation for mutual benefit: peaceful co-existence – remain a cornerstone of China’s foreign policy today. This means, generally speaking when engaging in trade or giving aid to developing countries, China does not impose conditions that interfere with the internal affairs of the recipient country. 

Because of China’s diplomatic approaches, leaders in the developing world have welcomed China’s rise, portraying Beijing’s respect for their sovereignty almost as proof that they have moved beyond dependency on the West. At the 2012 FOCAC meeting, former South African President Jacob Zuma once remarked, “We are particularly pleased that in our relationship with China we are equals and that agreements entered into are for mutual gain. We certainly are convinced that China’s intention is different to that of Europe, which to date continues to intend to influence African countries for their sole benefit.” China’s rise has also been welcomed in much of Asia, including in Saudi Arabia and Pakistan, which have become China’s agents for its Belt and Road initiative. 

China and Aid Effectiveness

The second factor that makes China’s rise a blessing for developing countries is that China’s willingness to support and invest in politically risky countries provides the recipient countries aid and investments that they would otherwise not get from the Western institutions or states. While the OECD’s Official Development Assistance program can be praised for the fact that it applies certain conditionalities on aid recipient states, it has left the bottom countries scrambling for their survival in many respects. Hence, China’s rise could serve as an alternative to fill in the needs gap for developing countries that do not receive enough foreign aid.  

In assessing the flow of aid to developing countries, there has been a number of debates as to whether the current system of aid allocation is effective or not, which has been dominated by Western institutions. Strikingly enough, despite the need for support, developing countries do not receive the same amount of aid as middle-income countries. Moreover, the poorest countries, in what Paul Collier terms as the “bottom billion”, often receive aid in the form of loans rather than grants. On the other side, middle-income countries have been getting a bigger share of the pie. This is because donor countries have a much more commercial and political interest in the middle-income emerging countries than the tiny markets and powerlessness of the bottom billion. Hence, in that respect, the allocation of foreign aid is high politicized and interest-based. 

However, amid the controversies of the allocation of foreign aid, some argue that the reason the bottom billion receive less amount of aid than the middle-income countries is because of the risk associated with foreign aid. They argue that providing aid to countries that have poor institutional frameworks to manage the fund ignites political instability. Thus, it is more effective to provide countries that lack institutional frameworks aid in the form of loans till they are stable enough. 

Nevertheless, while limiting aid to limit corruption may be a well-intentioned approach, the ODA has limitations. Given this circumstance, China’s rise could help fill in the gap in aid that some developing countries receive. This is not to say that Chinese aid and investment are well-intentioned or even more effective, but rather that in some circumstances, in countries where foreign aid and investment are short, Chinese aid and investment can fill in the gaps. Hence, for the aid and/or investments recipient countries, receiving support from China may well be a matter of survival or chaos. 

A rather more important aspect of the Chinese approach that makes it a blessing for developing countries is the fact that much of Chinese aid and investments is focused on infrastructure projects. This is a distinguishing factor from that of the Western approach, and one worth praising. Empirical results suggest that infrastructure has a highly significant positive impact on developing countries’ export performance, whereas the institutions turn out to have a limited impact.   For instance, a recent study found that the estimated effect of raising African states’ infrastructure funding to that of other middle-income states would bring up to 2 percentage points in additional per capita growth. Furthermore, infrastructural limitations, particularly in power supplies, depress productivity at least as much as red tape, corruption, and lack of finance.

Moreover, in countries where the corruption rate is high, aid often does not reach the poorest of the poor. It is estimated that close to 11 percent of aid provided to the bottom billion is diverted into military expenditures instead of helping those in need. Indeed, although 11 percent looks a small margin, it accounts for a large portion of the military budget in many countries. For instance, 40 percent of the military budgets in African countries is funded through foreign aid.

Hence, recognizing China’s no-string-attached approach to aid, its willingness to engage with developing states at equals, its primary focus in infrastructure development as opposed to cash support, it is fair to conclude that China’s rise has been a blessing for developing states in many respects. The Chinese model is a better alternative to the neoliberal model that has been supported and imposed on developing countries by the World Bank and the IMF.  It is flexible in addressing problems, not overtly ideological and it focuses on innovation.