2012.05-Working Paper-China-Africa Cooperation a New Approach to Improve Development

China-Africa Cooperation: a New Approach to Improve Development Effectiveness
Wang Xiaolin1; Liu Qianqian2

Abstract
　　Since the establishment of the Forum on China-Africa Cooperation, China and Africa have achieved great success in the aspects of FDIs, trade, infrastructure, agriculture and poverty reduction. China-Africa cooperation has emerged as a new role model for South-South cooperation. It has also provided a new framework for the improvement of development effectiveness. The traditional OECD model of aid adopts a process-driven approach, which emphasizes good governance, accountability, transparency, participation of the recipient countries. However, it ignores the economic development and poverty reduction of the recipient countries. This way of aid has proved to be unsuccessful in term of poverty reduction. As a result, many countries have doubted the effectiveness of the traditional aid model. Regarding China-Africa cooperation, the Chinese government emphasizes mutual benefit and win-win cooperation. The Chinese government combines aid with market-oriented investment and trade so as to promote the economic growth of African states. It is a new kind of growth-driven approach for development, which also provides a new way to improve development effectiveness. Rather than integrating China into the existing OECDDAC aid model, the future of international development cooperation should be more diverse and inclusive.
Key Words: China-Africa Cooperation; Development Effectiveness; Aid

　　Since 2000, under the framework of the Forum on China-Africa Cooperation (FOCAC), the cooperation between China and African states have achieved great success in political, economic, social development and security aspects. China- Africa cooperation not only becomes a model for South-South cooperation, but also provides a new
framework to improve the development effectiveness. First, it overviews the achievements of China-Africa cooperation in the aspects of investment, trade, infrastructure, agriculture and poverty reduction. Second, it compares the traditional OECD-DAC aid model and the framework of China-Africa cooperation (South- South cooperation) in terms of development effectiveness. Finally, based on the experience of China-Africa cooperation, it provides an outlook
for the improvement of development effectiveness in the future.

I. The Achievements of China-Africa Cooperation
　　Since the establishment of the FOCAC in 2000, China and Africa have achieved great success in many aspects, such as investment, trade,infrastructure, capacity building, finance and tourism. As a result, it has gradually become a multi-level and wide-ranging framework. China- Africa cooperation, which is an important part of South-South cooperation, injects new vitality to the South-South Cooperation. It plays a crucial role in enhancing the status of developing countries in the international political and economic system and promoting the establishment of a more fair and square international development mechanism. In this section, it briefly overviews the achievements of China-Africa cooperation in the aspects of investment, trade, infrastructure, agriculture and poverty reduction.

Investment
　　China’s experience of reform and opening up policy is to create favorable environment for FDIs. It tries to attract foreign capital to China and bring the capital, technology, advanced management skills for development, so as to break the vicious cycle of poverty. Therefore, the Chinese government encourages the Chinese companies to go out to invest in Africa. Since 2000, there has been an exponential growth in China’s foreign direct investments in Africa, which increased from a few hundreds of millions of dollars to $13.042 billion by the end of 2010. Figure 1 shows, China’s investment in Africa has grown rapidly since the Beijing Summit in 2006. In particular, it reached at $5.491 billion. China’s FDIs has been in 49 African countries, mostly in South Africa, Nigeria, Zambia, Sudan, Algeria and Egypt. It involves various industries, including mining, finance, manufacture, construction, tourism, agriculture, forestry, animal husbandry and fisheries (Figure 2). There are also various forms of investments, including sole proprietorship, joint ventures, mergers and acquisitions, and joint development of resources with the third state enterprises. The investors include large and medium-sized state-owned enterprises, private enterprises and individuals.

 　　From the opening up, a large amount of foreign direct investments came to China. It led to the economic growth, technological progress and the improvement of management skills. Similarly, the Chinese government brought the FDIs into Africa, which has caused the economic growth of African states.



Figure 1 China’s FDIs in Africa

Sources: China Statistical Yearbook, various editions, 2005-2011



Figure 2 Sector Distribution of China’s FDIs in Africa

Sources: State Council Information Office, China-Africa Economic and Trade Cooperation, December 2010

Trade
 　　Based on comparative advantage, a more open international trade system will not only help the economies integrated into the global value chain system, but also add value to the product. In this way, the goal of development and poverty reduction can be achieved. Since the opening up, China has become the world’s largest cargo importer and exporter through its export-oriented development strategy. Many studies have shown that free trade is conducive to economic growth and poverty reduction. Weiming Tian (2011) suggests that during the past 30 years China has
succeeded in reducing the rural poor in an open world trade system. 1
 　　Trade is the basic form of the China-Africa economic cooperation. Along with the development of China-Africa relations, the volume of trade between China and Africa has enlarged. In 1950, the bilateral trade between China and
Africa was merely $12.14 million. It rose to $0.1 billion in 1960 and $1 billion in 1980. From 2000 when the trade volume reached above $10 billion,the bilateral trade between China and Africa showed rapid growth momentum. It increased by $100 billion in 2008. In particular, China’s export to Africa was $50.8 billion and its import from Africa was $56 billion. China has singed bilateral trade agreements with 45 African states to strengthen cooperation in areas such as customs, taxation, inspection and quarantine. It has created favorable conditions for the development of China- Africa trade. In order to encourage African states to import to China, China offered the zero-tariff treatment to many Africana LDCs, which has official diplomatic relations with China. By July 2010, the products had reached over 4700 tariff lines. It will gradually cover 95 percent of the total tariff lines which follow the regulations of the Customs of the People’s Republic of China Import and Export Tariff. Driven by zero-tariff policy, Africa’s export increased dramatically. 2 Figure 3 shows that the volume of China-Africa trade reached $127.04 billion in 2010.



Figure 3 Trade between China and Africa

Sources: China Statistical Yearbook, various editions 2005-2011

Infrastructure
 　　It has been clear that, infrastructure can promote productivity, boost trade and lower the transaction cost, which lay a solid foundation for the economic growth. In this sense, infrastructure plays a significant role in growth and productivity. Furthermore, according to some scholars, it brings a greater impact on the low-income group. For
example, due to the intensified investment in infrastructure construction from the beginning of the 21st century, the growth rate of income per capita in Latin America has increased by2% to 2.5% (Calderon and Serven, 2010). In addition, infrastructure is helpful to international economic integration (Dollar, 2006).
 　　Infrastructure is vital to poor developing countries. Based on a survey, which have samples of four low income countries-Bangladesh, China, Ethiopia, and Pakistan- the infrastructure construction is helpful for promoting the productivity, gains in means of production and the international economic integration. According to Antonio Estache, the rate of return in the infrastructure construction varies from 20% to 200%. 3

 　　It is shown in a recent study that, China’s total rate of return on capital was 25% on average from 1978 to 1993. 4 In addition, the infrastructure construction in China has facilitated the growth of production capacity and poverty alleviation.
 　　This is significant to African countries. Since infrastructure there is lag behind, the potential shadow price could be even higher. Put it differently, the investment of infrastructure construction can bear higher rate of return, if it is conducted in countries with weak infrastructure.5
 　　40% of the African population lives in landlocked countries, resulting in the weakness in infrastructure on the national and the local level. In Africa, only 29% of the people have access to electricity, 31% of the population has access to sound sanitation, and 60% of the population has access to drinking water from an improved source. In rural areas, only 33% of the rural population has access to all-weather road. In other low income states, however, this proportion is 49%. A study from World Bank demonstrated that the gap in infrastructure investment in African states is approximately $31 billion.67 alleviation.
 　　In 2010, China-DAC Study Group convened a meeting named ‘Infrastructure: the Foundation for Growth and Poverty Reduction’. African states provided their feedback on China’s support for infrastructure construction. Some senior officials attended the meeting expressed their positive views on China’s role in the development of
infrastructure in Africa. Some suggested that although there are some problems and challenges, most of them can be solved out.8 Some African officials suggested that Africa can make use of China’s economic and technical assistance in the following three aspects so as to establish a winwin cooperative partnership: a) To make users
pay to recover the cost and let the private sector to be involved, based on China’s experience. b) Regional integration: In line with privileges set in regional economic community and NEPAD, China can concentrate its investment and trade on supporting infrastructure development for the regional integration in Africa. c) To learn China’s way of attracting investment and development effectiveness, which can promote transparency, competitiveness, sustainability and aid coordination. alleviation.
 　　The infrastructure construction is one of the key fields in economic and trade cooperation between China and Africa. China attaches great importance to supporting African countries to improve infrastructure, helping them build houses, roads, bridges, railways, airports, ports, telecommunications, power networks, water supply and drainage systems, and hospitals through means such as grant, project contracting, investment and expanding channels of financing, which have positive effects on the economic and social development of Africa. By the end of 2009, China had assisted Africa with more than 500 projects on infrastructure. Some major projects include the BeletUen-Burao Highway in Somalia, the Friendship Harbor in Mauritania, the Mashta al Anad-Ben Jarw Canal in Tunisia, and the National Stadium in Tanzania, and the Convention Center of the African Union. In support of the improvement of infrastructures in African countries, the Chinese government has provided them with a great amount of preferential loans. Moreover, China has supported Chinese financial institutions to expand their business loans in Africa. China
has also strengthened the financing in Africa, especially after the commencement of the Forum on China-Africa Cooperation. From 2010 to 2012, China is scheduled to provide Africa with preferential loans worth $10 billion. These loans are to be used to finance some of the big projects under construction, such as an airport in Mauritius, housing in Malabo, Equatorial Guinea and the Bui Hydropower Station in Ghana.
Agriculture
 　　In the initial stage of reform and opening-up in 1978, the Chinese government has not only realized that agriculture is “a powerful engine” promoting the economic growth, but also has introduced important reforms—taking agriculture as a priority in economic development— into the development strategy. The first driving forces for
the development of agriculture and rural diversification are those with Chinese characteristics, such as contract responsibility system, township and village enterprises. The development of agriculture in China is driven by“the organic integration” of the state, the market and farmers, as well as by relevant strategies which emphasize government policies on the one hand, and science and technology on the other hand”.9
 　　According to China-DAC Study Group, the 53 African countries differ greatly from China in natural resources endowment, population, geography, social development, economic development, politics, history, culture and some
other aspects. However, China’s experience cannot be applied to Africa directly. Some situations are similar and the experience is applicable. Put it specifically, First, though the major driving force for China’s growth is from labor
intensive production sector, agriculture is the solid foundation for a pro-poor growth. Priority should be given to the agriculture. Second, China takes pilot projects and trial before implantation. This pragmatic way is helpful to farmers’ selfimprovement and self-development. Third, there are some problems in China’s agriculture sector,
such as the income gap and the unbalanced structure between urban and rural areas, unclear land rights, environment pollution and ecological deterioration. 10
 　　Food security is significant to the steady development and poverty reduction in Africa. Agriculture is the pillar industry for most African states. It is also a preferential field for economic and trade cooperation between China and Africa. China should always put food security as a fundamental goal for China-Africa cooperation.

 　　Agricultural cooperation between China and Africa incorporates agricultural infrastructure construction, food production, breeding industry, the exchange and assignment of agricultural technology, the proceeding, storage and transportof agricultural products. By the end of 2009, China had helped Africa build 142 experimental stations and extension stations for agricultural technology, farms and other agricultural projects. Meanwhile, China has launched 14 projects of agricultural technology demonstration center, and provided African states with a great amount of agricultural materials and equipments. In addition, the Chinese government encourages Chinese enterprises to invest in projects for agricultural product proceeding and agricultural development in Africa.11
Poverty Reduction
 　　Poverty is a pervasive problem troubling African states, and sub-Sahara Africa is the major region suffering from poverty in the world. According to the World Bank, in 1981, the poor population with daily consumption of less than 1.25 US dollars was 205 million. It increased to 290 million in 1990 and 395 million in 2005 (Figure 4). Since the establishment of the Forum on China- Africa Cooperation, and especially since the 2006 Beijing Summit, China and Africa have been intensifying cooperation in investment, trade and assistance. A stronger cooperation will surely promote the economic growth and poverty reduction in Africa. Moreover, the cooperation in poverty reduction is also deepening.



Figure 4 Poverty in sub-Sahara Africa

 　　In 2005, the International Poverty Reduction Center in China (IPRCC) was founded. The aim of the Center is to contribute to global poverty reduction. Through poverty reduction training, Forum on Global Poverty Reduction, China- Africa Poverty Reduction Conference and studies on poverty reduction in China and Africa, IPRCC has shared knowledge and experience with African states. In addition, IPRCC, by special training course, has introduced the general situation, strategy, pattern, achievements and experience of China’s social and economic development and poverty alleviation to African government officials. It has also analyzed existing problems and challenges for poverty reduction in China and Africa, and probed new ways for promoting global poverty reduction. As a result, the poverty reduction strategy has been improved. The capacity to formulate and implement poverty reduction policies are promoted, and cooperation between China and Africa in social development, economy, culture and other aspects are deepened. By the end of 2011, IPRCC has held 41 training seminars for 517 officials from 42 African countries.
 　　Through the investment, trade and technical assistance on poverty reduction, the population of the poor and the poverty incidence in sub-Sahara Africa have decreased together for the first time from 2005 to 2008. The population of the poor was reduced from 395 million in 2005 to 386 million in 2008; the poverty incidence felt from 52.3% in
2005 to 47.5 % (Figure 4). While we do not have sufficient evidence and systematic data to prove that whether the Forum on China-Africa Cooperation has played a significant role in poverty reduction in Africa, the population of the poor and poverty incidence did fall after 2005.

II. Comparison between China-Africa Cooperation and Traditional Development Aid

 　　During 29 Nov-1 Dec 2011, the 4th High Level Forum on Aid Effectiveness (HLF-4) was held in Busan, South Korea which reviewed and appraised the progress on aid effectiveness since the implementation of Paris Declaration. OECDDAC believed that Paris Declaration was formulated based on the framework and experience of decades of global development cooperation with the aim to achieve common vision and framework for future reform through actively disseminating aid practices in aid organizations and developing states. Busan conference believed that since the conclusion of Paris Declaration, the aid has achieved progress. However, the progress was far from satisfactory. The 2008 Accra Agenda for Action appealed to enhance country ownership, establish a more inclusive partnership, and improve accountability and transparency so as to yield more fruits in terms of development. But the progress in those aspects was insufficient. Busan conference aimed at the deeper political commitment so as to
enhance development effectiveness.
 　　The approach of China-Africa economic and trade cooperation is obviously different from that of the traditional aid system. In this article, the aid of OECD-DAC is summarized as “process-driven development aid”, while China-Africa cooperation is defined as “growth-led development cooperation”. Being more inclusive and diversified, the latter is a new approach for international development cooperation.
A) OECD-DAC Traditional Aid Model: A Process-driven Approach
 　　To put it simply, the traditional aid model is a process-driven approach. In other words, OECDDAC countries are more interested in the process of aid. Since 1990s, the DAC countries have been more concerned to see whether aid contributes to the political and social progress of the recipient countries. They focus more on the promotion of
good governance and the democracy process. The DAC countries have highlighted the principles of fairness, transparency, accountability and participation. From their perspective, good governance, human right and democracy are the basis which sustains development.

 　　Therefore, in the aid process, traditional donors have taken the various indicators of good governance as the precondition to assist developing countries, that is, to combine ODA with social development and democratization of the aid recipient countries. While giving aid, they export their democratic consciousness and expand their national values to the African recipients. It was traditional donors’ hope that the recipient countries act as required, which reflects the demand of democracy. For example, the strings attached by the United States were that the aid recipients’ leaders must implement democratic reform, honest administration and rule of law. Moreover, countries as the Netherlands incorporated good governance and related contents into their aid policies in the 1970s. In recent years, in order to reinforce democratic governance, the EU has specified in the rule of allocating aid to African
recipients that when the recipient countries solve the democratic governance issue highlighted in the aid agreement, they will get an additional reward as high as one third of the original funds that are allocated to them (Meibo Huang, Qifeng Zhang, 2001).
 　　Although good governance is helpful to the overall effectiveness of international development aid, it comes at a price: some poor countries in desperate need of foreign aid cannot receive the external fund. If they want to get it, they must conduct economic and political reforms. In this sense, current international development aid submits to the western common values such as freedom, equality, democracy and human rights, rather than targeting directly at the overall poverty of recipient countries. Therefore, the flow of international financial aids is inconsistent with the poverty level of developing countries receiving foreign aid. The process-driven financial funds flow more to countries that qualify for governance conditions. If funds were provided to poorly governed countries, it might discourage donors.
Despite the result-oriented framework outlined in Paris Declaration, there is no complete overhaul of the process-driven approach in practice. The traditional aid model is a process-oriented approach with democracy at its core. Furthermore, traditional donors conduct evaluation based on the criteria of good governance. They usually link the aid to the specific policies of the recipient countries, which limit the ownership of the recipient countries to carry out the poverty alleviation program in line with their respective national conditions. Many recipients are discontent in this respect, especially when the tied aid results in the waste of aid money to some extent. Based on an analysis of the OECD on aid in 2003, the costs of tied aid for low-income countries were about billions of dollars. For instance, sub-
Saharan Africa had to pay a “tied aid tax” of $1.6 billion (UNDP, 200512). As one of the core aims of aid is to reduce poverty, some scholars argue that tied aid acts as an abuse of poverty-focused development assistance. 13
 　　Many developing countries seek foreign aid due to their extremely low economic development level and overall national poverty. Therefore, the key to reduce poverty is to promote the comprehensive national economic progress. Emphasizing fairness, transparency and accountability in the process of aid while ignoring the development of national economy cannot solve the poverty issues fundamentally. Rather, it could form a vicious circle of aid and poverty. Although from the angle of democracy, traditional aid model is fairly successful, it fails to address the fundamental poverty issues of Africa. Foreign aid itself cannot change a society. Investment and trade are needed to break the poverty trap and hence promote economic expansion and social development.
B) China-Africa Cooperation: A Growth-led Approach
 　　Aid is part of the equation to achieve development. In other words, development cannot merely rely on aid. From the perspective of the Chinese government, the main stimulus to economic growth is from developing countries themselves. China's economic growth since reform and opening up can be attributed to the organized integration of aid, foreign direct investment and international trade and their submission to China’s national overall development strategy. China's development benefited from the financial and project support of World Bank, Asian Development
Bank and other international organizations, and also from the help of such developed countries as Japan and the UK, but all the aid has never dominated the Chinese development process. Rather, China tries to establish its own innovating development pattern. Take World Bank's antipoverty projects in China as an example. China's biggest gain was not the farm produce generated by the projects themselves. Rather, it was the managerial experience that China learnt from World Bank and the later successful formulation of its own project managerial methods. Currently,
China has formed a set of efficient management skills for agricultural development and development-oriented anti-poverty projects to serve for the development of agriculture and the rural areas. It illustrates that external aid, foreign
capital and trade must serve for domestic development strategy. Meanwhile, external aid, foreign capital and trade should be combined and reinforce one another so as to cultivate homegrown growth and innovation capacity.
 　　China-Africa cooperation is influenced by China's utilization of external aid, foreign capital and trade. Economic and trade cooperation between China and Africa aims to increase organic growth. The successful experience of the Forum of China- Africa Cooperation from 2000 is an example to the point to a certain extent. It is not difficult to find out
that China-Africa cooperation is a growth-led and efficiency-oriented win-win cooperation framework. There are five major characteristics of China- Africa cooperation: (1) further balanced development of trade; (2) expansion of mutual
investment areas; (3) emphasis on infrastructure building; (4) enhancement of capacity building; (5) improvement of living standards.
 　　The first four characteristics out of the five are growth-led. Trade, investment, infrastructure and development capacity are in nature catalyst for the increase of domestic growth capacity without overemphasizing the role of aid. This is because that development of a state must depend on the boost of market and private economy. Trade, investment, infrastructure and development attach great importance to capacity building of the market, while aid is in nature a public good which gives more play to the role of government. Processoriented aid is the traditional model of South-North cooperation. China integrates investment, trade and aid, and gives full play to both the market and the government with the market playing a dominant role, which is inevitably a growth-led approach. Therefore, China-Africa cooperation approach stands in sharp contrast to the traditional western-style process-oriented approach.
C) Process-oriented Approach vs. Growth-led Approach
 　　The advantages of the OECD process-oriented approach are threefold. First, it is helpful to encourage the recipient countries to establish a set of western-style democratic system incorporating values like participation,
transparency, accountability and good governance that are highlighted by the donors. Second, it is conducive to supervise and constrain the corruption of the funds of the recipient countries. Third, because the financial aids are financed by taxes, stressing the above-mentioned values will allow the recipient governments to give a reliable
cause to the taxpayers and thus gain their votes. There are also some limitations of this approach. As many researches argue, aid is not effectively helpful in fighting against poverty in developing countries. Meanwhile, instead of embarking on an independent development path, the recipient countries grow dependent on aid.
 　　There are some merits of growth-led China-Africa cooperation. First, investment gives the market the dominant role which can promote domestic economic growth and poverty reduction without reaching out for external help. Second, trade gives full play to the comparative advantages of China- Africa cooperation which is beneficial to the
progress of domestic economy and anti-poverty efforts. Third, aid, if concentrated in large public work and infrastructure, serves investment and trade by integrating the function of the government and the market and also fully leverages the public funds.
 　　As a public good, aid gives full play to the dominant role of the government; while investment and trade encourage the engagement of the private sector. The local productivity will be improved if investment is made available to them; and domestic market of recipients will be connected to the international economy if international trade is enhanced.

 　　It can be said that the growth-led China-Africa cooperation approach is, to a large extent, a new approach derived from China’s own development experience. However, currently, China faces challenges to transform its development pattern because it shows some shortcomings which are the reflected in the growth-led China-Africa cooperation approach, especially embodied in the following aspects: domestically, wealth gap is increasing and social conflicts are outstanding. Internationally, China’s outbound aid projects are often subject to criticism due to the lack of transparency. Because of limited local participation, China is also criticized in the areas of corporate social responsibility and environmental protection.

 　　Under such circumstances, the Chinese government has begun to transform domestic development pattern and vigorously promote inclusiveness and pro-poor growth to ease social conflicts during the 12th Five-Year Plan period. It has also begun to pay more attention to all kinds of problems of foreign investment and aid and make policy adjustments accordingly.

 　　In conclusion, traditional developed countries pursue an approach that is focused on democratic values and the aid process, while the emerging China-Africa cooperation is much more growth-led with an emphasis on the long-term effect of investment and trade on economic growth and development. Only if the recipient countries realize economic take-off by themselves, can we call it win-win development cooperation. African countries should weigh the pros and cons of the traditional aid approach and China-Africa cooperation approach. On the one hand, they should accept transparency and fairness so prescribed in the traditional aid model. On the other hand, they should be clear that development is driven by robust, sustainable and inclusive growth. The government should effectively integrate aid, investment and trade in order to serve domestic development strategy and promote the strong growth of domestic productivity.
III. Conclusions: Three Principles to Improve Development Effectiveness
 　　The Busan High Level Forum on Aid Effectiveness has brought about a new concept of development effectiveness. The cooperation between China and African countries has pioneered a new model for South-South cooperation. This new model for development cooperation starts to play an increasingly important role in promoting
international assistance and development cooperation. It is not only a significant supplement for the traditional aid model but also a major means to promote communication and cooperation between traditional and emerging
donors as well as recipient countries. Based on the assessment on China-Africa cooperation and the comparison with the traditional aid, we suggest that to improve development effectiveness, three principles are necessary.
3.1 The diversification of development cooperation
 　　In the post-Busan Conference period, international development and cooperation should be more diversified. China-Africa cooperation and other South-South cooperation between emerging economies and other developing countries have increasingly enriched the content and provide more forms of international development cooperation. The Busan Forum emphasized that  emerging economies should be incorporated into the existing international aid regulatory system to form a strong unified force. However, the incorporation of all global development cooperation into a single regulatory system would mean that China should abandon the principle of no attached conditions when providing aid. It is unrealistic and unfair to the developing countries. It could also hamper the effectiveness of development aid. In addition, if we consider the international assistance a market system, this system should be diversified and competitive to avoid monopoly.
3.2 The inclusiveness of development cooperation
 　　For the purpose of improving development effectiveness, the international development system in the future should be more inclusive. Only relying on the traditional model or the new model for development cooperation could
undermine development effectiveness. The traditional and the new model do not contradict each other. The operation of international aid should be an inclusive process where the donors and recipient countries learn from each other and innovate for their own aid and cooperation approaches. The emerging donors do not know these rules very well. The traditional donors should tolerate the immaturity of new aid model and allow some time before the new model gets improved. After all, traditional donors have spent many years formulating relatively sophisticated procedure and regulations. The different models of international development are not a zero-sum game. It should be a mutually-supplementary process where both the traditional and the new model can exert its advantages.
3.3 The integration of development and cooperation
 　　There are two major aspects regarding the integration of cooperation. One aspect of integration is that that assistance, investment and trade should be relevant to the national development strategy of the recipient countries. It
is based on the experience of China. In China, assistance from international organizations or other countries must comply with China’s policy for development (mainly the “five year plan”). The aid target should be in line with China’s overall strategy, long-term poverty reduction plan and the plan of local economic development. The practice
has the advantage of being able to lead the donors to formulate targeted aid policy suiting China’s national condition and development strategy. Currently, many UN organs adjust their aid programs according to China’s ‘five year plan’and set priorities for their programs to better suit China’s practical situation and effectively use the
aid fund.
 　　Traditional donors usually provide budgetary aid. It means to inject aid funds to the budget of the recipient countries. In this way, the transparency and accountability of aid fund is guaranteed. But this also leads to some problems. On the one hand, the budget of the recipient countries is influenced by foreign capital. One the other hand,
the recipient countries would develop long term dependence on foreign aid.
 　　The second aspect of integration is the effective integration of aid, trade and investment. On the one hand, aid, as global public goods, should help the recipient countries attract foreign direct investment, which contributes to the boost of the local economy. On the other hand, aid should be linked to trade, as trade can incorporate the products and raw materials of developing countries into the global value chain. With such an international platform for resource allocation, the domestic productive forces will be further developed.

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