China in bid to focus on foreign aid; seek more clout in global scene

The formation of the State International Development Cooperation Agency is part of a massive institutional revamp.

As part of its efforts to increase its zone of influence, China has been trying to position itself as a key aid donor around the world. And, as in many other spheres, the country is going the special agency way, and here again: setting up a new agency with an integrated role that will channel foreign aid and plan strategic projects related to the Belt and Road Initiative (BRI) – a major initiative of President Xi Jinping’s to industrialise Eurasia.

The formation of the State International Development Cooperation Agency (SIDCA) is part of a massive institutional revamp, to steer China’s ongoing transition, marked by domestic reform and deeper engagement with the rest of the world, led by the Communist Party of China (CPC).

SIDCA will report to the State Council, China’s cabinet, led by Prime Minister Li Keqiang. It integrates roles which were earlier fragmented between the foreign and commerce ministries.

SIDCA’s focus will be to “better serve the country’s global strategy and to build the Belt and Road Initiative”, the State Council said.

The US$900 billion BRI aspires to recreate and expand the old Silk Road trading routes between Asia, Europe and Africa.

The State-run news agency Xinhua reported that the new agency “will be responsible for making strategic guidelines, plans and policies on foreign aid”. It will also be involved in making “foreign aid plans and overseeing and evaluating their implementation,” it observed.

The decision, awaiting final approval during the ongoing session of the National People’s Congress (NPC), China’s parliament, is in line with Beijing’s emergence as a global aid donor, nearly at par with the United States. According to a study by U.S.-based AidData, released in October, China pitched $350 billion in foreign aid and other forms of State financing in five major regions of the world, between 2000-14. The U.S. overseas aid in the same period was marginally higher at $394.6 billion. But China could catch up soon as it started becoming a serious aid donor only in 2009.

Analysts say that the formation of SIDCA suggests China’s increasing reliance on economic and foreign aid as levers to project its international influence.

The Hong Kong-based South China Morning Post quoted Renmin University public administration professor Mao Shoulong as saying, “Diplomacy and the military have been the two traditional pillars of its international strategy, and now China is increasingly relying on economic ties, including foreign aid, to achieve its goals.

“It’s not easy to coordinate economic diplomacy when powers are scattered among different Ministries. The new agency can help in this regard,” he observed.

The institutional revamp undertaken to crystallize and execute plans under President Xi’s “new era” also includes a proposal to set up a “State immigration administration”. This has been done in anticipation of China becoming a magnet for attracting foreign talent, as it transitions towards an advanced digital economy.

China is also planning to streamline its domestic financial governance through consolidation of existing multiple agencies. Law makers have set up for approval the formation of a State market regulatory administration. “Responsibilities of the administration include comprehensive market supervision and management, market entity registration and market order maintenance,” Xinhua reported. The merger of China’s banking and insurance regulators is also proposed under a China banking and insurance regulatory commission.