Journal opinion article - Essay Example

The Strategy behind China's Aid Expansion The contribution to foreign aid by China has drastically increased with the economic progress of the nation from 2001 to 2011. China’s foreign aid which amounted to 1.7 billion dollars in 2001 and the volume of foreign aid grew enormously to 183.9 billion dollars in 2011. China’s increasing foreign aid in the last decade is aimed at the benefits of China. The strategy behind China’s aid expansion policy follows a different model than the other developed countries and the US.

While the developed countries follow a subscription policy to offer foreign aid, China has resorted to the policy of financing the volume of foreign aid. Thus the foreign aid given by China has been expanded on the path of providing loans for availing aid by the foreign countries. In 2011, the Chinese government released its policy of foreign aid in order to ensure transparency on the high growth rate of foreign offered by China in the last decade. In this paper, it has been mentioned that foreign aid offered by China is due to the provision of the country’s policy in fulfilling its responsibilities and commitments in the international stage as an active role of a developing country growing into an economic superpower in the world.

China’s aid to the foreign countries is aimed at enabling foreign economies to restore their financial stability to meet means of production with the available resources. China’s model of offering international aid is also aimed at enriching the lives of the people, their style of livelihood, income level and the overall social and economic stability of the foreign countries. Thus China’s policy of expansion of aid has helped the country to build its brand image in the international platform that supports its status of an economic superpower.

The good image as international citizen in turn reaps benefits to China in increasing its exports and wide acceptability of its products and services across the globe. The increase in the exports of China has helped the country to consolidate its balance of payments and earn huge volumes of foreign currency reserves. This led to the appreciation of the Chinese currency and the country gradually attained competitive advantage in international trade over the years. The strategic policy of aid expansion of Chinese government has thus acted in favour of China and has helped the country to establish its acceptability in the international platform.

China has increased the volume of its resources made available for aid by 24% from 2004-2009. This is a strategic expansion of the aid policy by China. The expansion of aid offered by China has occurred in tandem with the economic rise and development in China over the years. Thus China’s aid expansion policy reflects the growth of economic status of China and its strategies to tap opportunities that not only earns revenues but also establishes the international image of China that is necessary for sustaining its economic growth rates.

China has provided foreign aid to the countries in three forms. The various form of offering foreign aid by China include the grants, interest free loans and concessional loans. China has not imposed any political condition on the foreign countries to which the loan has been granted. Thus by offering the loans, China has been able to attain financial advantages on their side as well. Thus the strategy of foreign aid has played the dual role of establishing its image in the international platform and at the same time has resulted in interest earnings of China.

The total aid offered by China could be segregated in the mentioned three forms to determine to determine that the grants form 41% of the total aid and the remaining 59% of the foreign aid comprises of loans which are either interest free or concessional. About 61% of the total concessional loans have been provided to the developing countries in order to support them to build their transportation, communication, electricity and other basic infrastructures. About 9% of the concessional loans are also provided to develop the capabilities of energy resources and the production of energy sectors.

China has classified the activities of providing foreign aid into eight categories which are namely, goods and material, human resource development, medical co-operation, technical co-operation, volunteer programs in foreign countries, emergency aid, debt relief and complete projects. The concessional loans are granted by the EXIM Bank of China. These concessional loans have earned huge interest in a comprehensive manner and thus China has been able to utilize its idle funds and resources for a good cause that has also reaped economic benefits for the country (WSJ 1).

Work Cited WSJ. The Strategy Behind China's Aid Expansion. 2013. Web. 09 October 2013. .