Scandinavian Working Papers in Economics

EIJS Working Paper Series,
Stockholm School of Economics, The European Institute of Japanese Studies

No 214: ODA FOR CHINA: SEED MONEY AND A WINDOW FOR CONTACTS

He Liping and Marie Söderberg ()
Additional contact information
He Liping: Beijing Normal University
Marie Söderberg: European Institute of Japanese Studies, Postal: Stockholm School of Economics, P.O. Box 6501, S-113 83 Stockholm, Sweden

Abstract: The Chinese economy has been growing with an average of 10 per cent during the last 25 years. Walking in downtown Shanghai or Beijing, you can find some spots that are so luxurious that they are unrivalled in the world. China does not fit the picture of an average developing country. However, China is still a large recipient of foreign aid. Figures from OECD show that in 2003 the People’s Republic of China received USD 1.3 billion but ODA (Official Development Assistance), only amounts to 0.1 percent of Chinese GNP. The Chinese economic growth is certainly not dependent on foreign aid. At the government level in Beijing, ODA is seen as seed money, a window for contacts with foreign experts and technologies or as cheap financing. This paper will start by looking at China as a recipient. What are the processes of receiving aid, what do the Chinese want to get out of it and what are their priorities? This will be followed by a description of China’s main donor, Japan, where aid to China is a highly political and controversial question. After a short description of Nordic aid to China in general, we will look at Swedish aid and make case studies at the project level. In the conclusion, China as a recipient will be analysed, as well as Japan and Sweden as donors looking specifically at the concept of ownership, partnership and institutional change.

Keywords: Japanese foreign aid; Nordic foreign aid; ODA; ODA to China; partnership; ownership; institutional change

JEL-codes: A10; D63; F35; I38; N15; N35; O53; R58

22 pages, September 30, 2005

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