Policy and institutional reforms of China’s economic aid: motives and implications

The People’s Republic of China (PRC) has been an aid donor for over six decades, offering multiple forms of development aid to other developing countries. Meanwhile, China has been constantly readjusting its strategies of aid provision while introducing institutional reforms to improve the efficiency of aid as a form of economic statecraft. What significant policy and institutional changes has China conducted in its aid distribution? What are the key motivators that have propelled such reforms? And how do Western donors perceive the Chinese model of aid distribution? Using a two-level analytical framework, this article mainly explores the domestic and international factors driving the three rounds of Chinese aid reforms. The article finds that while the transformation of China’s strategic priority enabled by leadership perception change is the key domestic incentive for aid reforms, international variables contribute to such processes either directly by exerting pressure and conveying knowledge or indirectly by changing China’s global status and leadership perception.