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Does one good turn deserve another? Evidence from China’s trade and aid policy

Author

Listed:
  • Camélia Turcu

    (LEO - Laboratoire d'Économie d'Orleans [2022-...] - UO - Université d'Orléans - UT - Université de Tours - UCA - Université Clermont Auvergne)

  • Yunzhi Zhang

    (LEO - Laboratoire d'Économie d'Orleans [2022-...] - UO - Université d'Orléans - UT - Université de Tours - UCA - Université Clermont Auvergne)

Abstract

In this article, we explore the effects of China's foreign aid on its exports. To do this, we use a sample of 165 countries during the period 2000–2014 and employ a gravity model. We find that the return on Chinese exports for every dollar spent on foreign aid is from $0.156 to $0.4, at the aggregate level. The aid provided in past periods continues to promote China's exports. We also show, while taking into account aid heterogeneity, that China experiences a higher return in terms of exports when providing development aid intended for infrastructure, to the recipients. Additionally, we find that China's international aid helps the country to trade more with similar income-level economies. Hence, it can, to a certain extent, foster South-South trade relations.

Suggested Citation

  • Camélia Turcu & Yunzhi Zhang, 2024. "Does one good turn deserve another? Evidence from China’s trade and aid policy," Post-Print hal-04732801, HAL.
    • Handle: RePEc:hal:journl:hal-04732801
    DOI: 10.1080/14631377.2024.2349391
    as

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