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

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  • Camelia Turcu

    (Université d’Orléans, CNRS, LEO, FRE 2014)

  • Yunzhi Zhang

Abstract

In this paper, we study the impact of China’s foreign aid on exports. We use a sample of 165 countries over the time span 2000-2014 and employ a gravity model with GDP-weighted multilateral resistance terms. Our findings suggest that the return on Chinese exports of every dollar spent on foreign aid is around 0.156$-0.4$, at the aggregate level. The aid provided in passed periods also promotes China’s exports. We also show, while taking account of the aid heteorogeneity, that the Chinese government could get a higher return in terms of exports when providing development aid relative to infrastructure, to the recipients. Furthermore, we find that China international aid helps the country to trade more with similar income-level economies. Hence, it can, to a certain extent, foster the South-South trade relations.

Suggested Citation

  • Camelia Turcu & Yunzhi Zhang, 2019. "Does one good deserve another? Evidence from China’s trade and aid policy," Working Papers 2019.02, International Network for Economic Research - INFER.
    • Handle: RePEc:inf:wpaper:2019.02
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    References listed on IDEAS

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    Cited by:

    1. Li Liu & Gary Gang Tian, 2021. "Mandatory CSR disclosure, monitoring and investment efficiency: evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(1), pages 595-644, March.
    2. Camélia TURCU & Yunzhi ZHANG, 2020. "How Does Development Aid Impact Trade Performance and Margins? Evidence from China," LEO Working Papers / DR LEO 2847, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.

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    More about this item

    Keywords

    Emerging donor; aid-trade nexus; trade margin;
    All these keywords.

    JEL classification:

    • F - International Economics
    • P - Political Economy and Comparative Economic Systems

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