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Does China really give more support to the developing world than the World Bank?

A new report in the Financial Times says that China has given more loans to developing nations than the World Bank in the past two years, another indication that China's influence on the world stage is growing.

Sino-African business is growing by the day

Sino-African business is growing by the day

The World Bank lent over 100 billion US dollars to developing nations from mid-2008 to mid-2009 – a record that was due to the financial crisis. But the China Development Bank and the China Export-Import Bank, both owned by the Chinese state, surpassed this record. The Financial Times, citing its own research, says that they gave out loans worth over 110 billion US dollars to firms and governments in developing countries.

However, Helmut Asche, an Africa expert at the University of Leipzig was skeptical about the figures.

"Statistics regarding Chinese loans and especially development loans are certainly not transparent so we don’t know how the Chinese loans are divided into categories that are comparable with the World Bank’s data," he told Deutsche Welle.

Different attitudes to aid policy

The World Bank gives long-term loans for the fight against poverty, the promotion of the private sector and environmental protection; whereas Beijing wants to expand the markets for "Made in China" goods and particularly to secure raw materials for China’s booming economy.

There are usually strings attached when the World Bank lends out money

There are usually strings attached when the World Bank lends out money

Doris Fischer, an economist with the German Institute for Development in Bonn said that China’s development policy was fundamentally different from the West’s in one way: "The Chinese do not say that what they are doing is development aid but call it economic cooperation, with a win-win aim and that’s why it does not adhere to the fundamental principles of good development aid that have been agreed upon internationally."

Countries that are particularly rich in raw materials have been able to benefit from China's economic cooperation policies - Russia, Venezuela and Brazil for example. And in Ghana and Argentina roads and railways are being funded by Chinese money and built by Chinese firms.

No strings attached to Chinese loans

Zimbabwe President Robert Mugabe and other dictators have benefitted from their economic partnership with China

Zimbabwe President Robert Mugabe and other dictators have benefitted from their economic partnership with China

Even though it is not always easy for the Chinese banks to top the World Bank’s conditions, with its low interest rates and long-term loans, as well as its willingness to waive debts sometimes, Dirk Willem Tervelde from the London-based Overseas Development Institute said that there was one particular reason why certain countries might go for the Chinese conditions anyway.

"There might be strings attached to loans from multi-lateral bodies such as the World Bank, which might look in more detail at governance for instance, and that might not be the case when China is providing loans," he said.

Beijing is not interested in human rights and democracy, which is why it is an ideal partner for dictators such as Robert Mugabe in Zimbabwe or Omar al-Bashir in Sudan.

But Helmut Asche said China’s rising influence and the shift of power from west to east would also benefit other governments in receiver countries "as it would give them more political leeway."

Even within the World Bank there has been a shift. In 2008, the post of chief economist went to a Chinese person for the first time.

Author: Christoph Ricking/act
Editor: Thomas Baerthlein

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