Chinese Foreign Aid and Democracy in Recipient States

• In Event: Economic Instruments of Foreign Policy

Abstract

From 2000 to 2020, China dispersed USD 1.34 trillion in foreign development aid, outstripping the US’ 1.02 trillion over the same period. In contrast with traditional donors from mostly democratic, advanced industrialized nations, Chinese aid holds no conditionality in line with its non-interference principles. Despite growing to become one of the largest aid donors, there is little research on the effects of Chinese aid on democracy in recipient states. This paper hypothesizes that Chinese aid has a stronger negative effect on democracy than aid from traditional donors because it is a more fungible resource for regimes to secure political survival. In addition, this effect will be magnified for autocratic recipients because weaker political institutions enable rulers greater scope to leverage aid for political purposes. A difference-in-difference event study design with Chinese aid as a continuous treatment does not find a general negative effect of Chinese aid on various democracy outcomes. However, non-democratic recipients experience negative effects from Chinese aid, particularly on Polity scores and to a lesser extent transparent law and civil society repression indicators. This suggests that Chinese aid has a unique effect on non-democratic regimes, who use these resources to interfere in elections and weaken executive constraints for their own benefit. In addition to filling a gap in research on Chinese aid and democracy, these findings have implications for debates on the nature of Chinese aid vis-à-vis traditional donors and the importance of domestic variables in mitigating the effects of aid on democracy.

Author

• Hannah Elyse Sworn, George Washington University