Environmental Determinants of Chinese Development Finance in Africa

• Author: Joshua C. Gellers,Chris Jeffords
• DOI: 10.1177/1070496518825282
• Date: 01 June 2019
• Published date: 01 June 2019
• Subject Matter: Articles

Article

Environmental

Determinants of Chinese

Development Finance

in Africa

Joshua C. Gellers

1

and Chris Jeffords

2

Abstract

To what extent are decisions regarding Chinese investment in Africa motivated by

environmental factors? A considerable body of work has examined the determinants

of foreign aid among traditional donors, producing useful debates about the relative

significance of recipient need or merit and donor interest. But far less scholarly effort

has focused on the motivations of emerging donors and the role of environmental

factors in influencing aid allocation. In an attempt to fill these gaps, this article uses

statistical techniques to test the hypothesis that China deliberately invests in African

countries with poor environmental performance for reasons related to recipient

need or donor interest. Drawing upon project-level data regarding investments

made by China in Africa from 2002 to 2012, the analysis suggests that Chinese

development assistance grows commensurate with a country’s environmental per-

formance, but only to a point. After a state achieves a certain level of environmental

quality, Chinese investments decline.

Keywords

China, development, foreign investment, environmental regulation, Africa

What are the determinants of foreign aid provided by emerging donors? To

what extent are the criticisms levied by Western governments and international

f‌inancial institutions against such donors legitimate? Although emerging

economies have engaged in the distribution of foreign assistance for decades,

recently such practices have come under f‌ire for, inter alia, propping up

Journal of Environment &

Development

2019, Vol. 28(2) 111–141

!The Author(s) 2019

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DOI: 10.1177/1070496518825282

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1

Department of Political Science and Public Administration, University of North Florida, Jacksonville,

FL, USA

2

Department of Economics, Indiana University of Pennsylvania, PA, USA

Corresponding Author:

Joshua C. Gellers, Department of Political Science and Public Administration, University of North

Florida, 1 UNF Drive, Jacksonville, FL 32224, USA.

Email: josh.gellers@unf.edu

dictatorships, exploiting natural resources, and forging alliances through eco-

nomic dependence. Some analysts have argued that, in contrast to the benevo-

lent traditional donor community, these new(er) donors ruthlessly pursue

national interests through the provision of so-called ‘‘rogue aid’’ (Naı

´m,

2007, p. 95).

The (re)emergence of a donor class consisting of developing states has been

greeted with skepticism by established donors, especially members of the

Development Assistance Committee (DAC), a group of industrialized states

within the Organisation for Economic Co-operation and Development. This

suspicion rests on assumptions that emerging donors are fundamentally reshap-

ing the nature of foreign assistance, and this changing environment presents a

challenge to the dominant development assistance regime (Woods, 2008,

p. 1206). In particular, some DAC members worry that less established

donors are undercutting their ability to promote improvements in governance

and human rights through the provision of aid requiring states to undertake

political and economic reforms (Bra

¨utigam, 2011, p. 761). At stake in this evol-

ving aid landscape is control over the development agenda and the resulting

economic and political trajectories it produces in recipient states.

China stands in the vanguard of these emerging donors. With a history of

providing assistance to developing countries dating back to 1950 (Dreher &

Fuchs, 2011, p. 8), the country currently extends more foreign aid than DAC

member Korea (Kitano, 2014, p. 304). This gravitational shift in the inter-

national aid arena has aroused considerable interest. China’s ascendance in

the realm of foreign assistance has animated concerns that the developing

giant seeks to undermine Western interests abroad and reduce the importance

of environmental protection, good governance, and transparency in the existing

development paradigm (Krauss & Bradsher, 2015). However, some argue that

such concerns are more indicative of a scholarly f‌ixation on perceived threats to

the Western-dominated international order than an unbiased assessment of

Chinese foreign policy (Hirono & Suzuki, 2014, p. 3).

The ideological foundation for Chinese foreign aid was detailed by Premier

Zhou Enlai in 1964. In a speech delivered in Ghana, Zhou laid out eight

principles:

(i) equality and mutual benef‌it; (ii) respect for sovereignty with no conditions

attached; (iii) provided through interest-free or low interest loans; (iv) promotes

self-reliance, not dependency; (v) quick results; (vi) uses best-quality equipment of

Chinese manufacture; (vii) emphasizes technology transfer through technical assist-

ance; (viii) Chinese experts will live at the standard of local experts. (Bra

¨utigam,

2011, p. 760)

These principles appear intuitively attractive to developing countries. A focus on

mutual benef‌it counters concerns that aid will be distributed primarily according

112 Journal of Environment & Development 28(2)