Reform Leading Group: Increase the overall effectiveness of foreign aid (Feb 2017)

Intro: Chinese aid became a topic for the Central Reform Leading Group.

In February 2017, the Central Leading Group for Comprehensively Deepening Reform 中央全面深化改革领导小组 issued the “Suggestions for the Reform of Foreign Aid” 《关于改革援外工作的实施意见》. The Leading Group emphasized the need to

“optimize the strategic outlook of foreign aid, improve the funds and project management of foreign aid, reform the institutional setup of foreign aid, and increase the overall effectiveness of foreign aid”.

要优化援外战略布局，改进援外资金和项目管理，改革援外管理体制机制，提升对外援助综合效应。

The fact that the Reform Leading Group issued a statement on foreign aid is in itself significant, because it was the very first time it did so. The Reform Leading Group was set up by Xi Jinping under the Politburo of the Chinese Communist Party in late 2013 to ensure that reforms are implemented (and if needed, pushed past the bureaucracy). The public debate about the need to reform the Chinese aid system has been going on for many years, but it was the first time that Xi himself took a position. South China Morning Post (SCMP) quoted Xi with the word “China must act more wisely in giving out foreign aid” after the meeting. According the the SCMP, the statement reflects Xi’s “desire to extract greater returns from China’s spending abroad as Beijing seeks to increase its international influence.” But why the urgency? Maybe because at the end of January 2017, China’s foreign exchange reserves fell below US$3 trillion at the end of January, the lowest level in six years. The Reform Reading Group linked the “more wisely” spending with the reform of the institutional setup of Chinese aid. For Miao Lü 苗绿 of the Chinese think tank Center for China & Globalization 中国与全球化智库 this means setting up a specialized foreign aid agency, as she wrote in a Global Times 全球时报 opinion piece after the meeting “Setting up a specialized foreign aid agency is absolutely necessary” 建立外援专门机构势在必行. In contrast to the majority of donor countries like Germany (GIZ), Japan (JICA) or US (USAID), China doesn’t have a dedicated aid institution. Instead, aid administered by the Ministry of Commerce in coordination with the Ministry of Finance and the Ministry of Foreign Affairs, and implemented in cooperation with over 20 central level government agencies.