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Report to Congress on 

Assistance by the People's Republic of China 

to Governments and Entities in Latin America and Africa 

Division J, Department of State, Foreign Operations, and Related Programs, 

Section 7071(1) (3) of the Omnibus Appropriations Act, 2009 (P.L. 111-8) 

Introdnction 

The People's Republic of China's (PRC) engagement with countries in Africa and 

Latin America has grown significantly over the past decade through economic 

activities, including foreign assistance, investment, and trade. China's assistance 

projects in these regiOlls have drawn the attention of international development 

experts, academics, and policy makers and have raised questions about the amount 

of foreign assistance China is providing to developing countries. Differing 

definitiOlls of assistance, the lack of transparency, and the broad array of projects 

by Chinese companies, bowever, make it challenging to undertake a thorough 

assessment. This report examines the various types of activities conducted by PRC 

govermnent and corporate organizations in Africa and Latin America, discusses the 

challenges to conducting an assessment of China's assistance to these regions, and 

outlines U.S. government efforts to engage the PRC government on development 

issues and to encourage greater transparency regarding its foreign assistance 

activities. 

China has foreign assistance programs throughout the world. According to a 2007 

report published by the PRC Ministry of Cormnerce (MOFCOM) on China's 

foreign assistance activities, the PRC in 2007 signed foreign assistance agreements 

with 102 countries worldwide, started 54 assistance projects, and completed 35 

projects. The PRC also undertook 27 technical cooperatiOll projects, delivered 

more than 150 batches of goods and equipment, and provided training to more than 

10,000 officials and technicians from developing countries. MOFCOM will 

release its 2008 report later this year. 

The PRC provides several types of foreign assistance, including the following: 

• Emergency disaster assistance, such as the provision of cash grants, 

emergency materials, and medical teams. 

• Training, educatiOll, and youth volunteer programs, including technical and 

managerial training to foreign students. 

• Youth volunteers to teach Chinese langnage and culture in foreign countries. 

• Financial assistance tied to specific projects, including grants, interest-free 

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or below-market loans, and related technical assistance on large-scale 

construction and infrastructure projects. 

• Entire construction projects for a recipient country, from financing to design 

and construction. The PRC may also provide materials and equipment to 

countries that have the capacity to complete the project on their own. 

• Debt forgiveness as a form of foreign assistance. 

No Authoritative Statistics ou the PRe's Foreign Assistance 

Although the PRC clearly is engaged in providing foreign assistance to countries in 

Africa and Latin America, the exact amount of the assistance as well as the details 

about its specific programs remain unclear. The Chinese government does not 

release official data about its foreign assistance, and limited information about its 

foreign assistance activities is available via press releases and news reports. 

Information that is released is often difficult to interpret. For example, the PRC 

does not use the internationally accepted definition of "official development 

assistance" (ODA) as defined by the Organization for Economic Cooperation and 

Development (OECD), which most donors interpret as development grants, 

humanitarian assistance, social welfare programs, and food aid. China's 

MOFCOM, which operates foreign assistance programs overseas, also oversees 

trade and investment projects. Given the export-promotion nature of its work, 

MOFCOM includes many trade and investment provisions, in addition to foreign 

assistance, when negotiating bilateral foreign assistance agreements. As a result, it 

is difficult to determine precisely which portion of a foreign assistance agreement 

is truly foreign assistance and which portion is intended for trade and investment 

promotion. 

In addition, the PRC does not release the terms and conditions of below-market 

loans it gives as foreign assistance, making it difficult to interpret this major type 

of foreign assistance. The China Export-Import Bank (EXIM Bank) is the only 

institution in the PRC that has the authority to issue below-market loans to 

overseas projects. The China EXIM Bank is devoted primarily to providing export 

credits to sellers and buyers to support the PRC's exports and has an explicit 

mission to promote trade between the PRC and other countries. According to the 

World Bank, the below-market loans issued by China's EXIM Bank from 2001 to 

2007 carried an average grant element of approximately 36 percent, but the grant 

element of these loans varied from just 10 percent to as much as 70 percent (the 

grant element is the portion of the below-market loan that can be viewed as foreign 

assistance). While these below-market loans offer better terms than those offered 

by private banks, they are not as attractive as ODA, which typically carries a grant 

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element of approximately 66 percent. 

Finally, given the lack of transparency regarding China's foreign assistance 

activities, it is difficult to determine precisely how, when, and where specific 

foreign assistance programs were delivered. For these reasons, it is difficult to 

assess the actual impact of the PRC's foreign assistance on Africa and Latin 

America. 

Estimates of the PRe's Foreign Assistance 

Although there is no authoritative source providing detailed statistics of the PRC's 

foreign assistance programs, a number of international development experts and 

academics nevertheless have provided estimates on the amount of China's 

assistance to developing countries. These experts' estimates vary widely, from as 

low as $970 million in 2005 to as high as $25 billion in 2007. Given the lack of 

figures from MOFCOM and the use of different definitions of what constitutes 

foreign assistance, it is difficult to report accurate numbers on the PRC's assistance 

to Africa and Latin America. 

Assistance to Africa 

Africa has been a major focus of the PRC's foreign assistance activities. President 

Hu Jintao announced at the Beijing Summit on China-Africa Cooperatiort in 2006 

that China would double its foreign assistance to Africa by 2009. President Hu 

traveled in February 2009 to Mali, Senegal, Tanzania, and Mauritius. In January 

2009 Minister of Commerce Chen Deming visited Kenya, Angola, and Zambia, 

and Foreign Minister Yang Jiechi traveled to Rwanda, Uganda, South Africa, and 

Malawi. On all of these trips, Chinese leaders highlighted PRC assistance to 

Africa. According to MOFCOM, in 2007 the PRC signed in Africa bilateral 

foreign assistance agreements with 47 countries, signed below-market loan 

agreements with 19 countries, and signed debt cancellation protocols with 32 

countries. It also completed 14 agricultural technology demonstration centers, 

dispatched 37 agricultural experts, and supported malaria prevention and treatment 

centers in Africa. 

In 2008, China continued its foreign assistance activities in Africa, including a 

large $9 billion infrastmcture and resource deal in the Congo. The following is a 

partial Jisting of the PRC's 2008 foreign assistance activities using the broadest 

definition of assistance that includes loans and government-sponsored investments, 

based on news reports or academic studies: 

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• Angola: PRC government-sponsored investment in housing and related 

infrastructure. 

• Congo: below-market loan for an optical cable network and PRC 

government-sponsored investment and below-market loan in the mining 

sector. 

• Ethiopia: grant for the construction of the African Union Hall, donation of 

vehicles and office equipment, and PRC government-sponsored investment 

in an industrial park development. 

• Gabon: below-market loan for a hydroelectric dam project. 

• Kenya: below-market loan for a road construction project. 

• Liberia: donation of hospital and medical supplies. 

• Madagascar: donation ofhurnanitarian assistance and medical aid team. 

• Niger: PRC government-spoosored investment in a refinery. 

• Nigeria: PRC government-sponsored investment in road and power plant 

constructioo. 

• Rwanda: grant to fimd a hospital. 

• Sierra Leone: below-market loan for a telecommunications network project. 

• Sudan: humanitarian grant for de-mining training, mine sweeping 

equipment, housing shelters, and health equipment. 

• Uganda: grant to establish health centers and donation of an office complex. 

• Zambia: PRC government-sponsored investment in a power statioo project 

and dooation of a sports stadium. 

Assistance to Latin America 

The Chinese government signaled the growing importance of Latin America in its 

foreign policy with the publication of a policy paper on Latin America and the 

Caribbean Region in November 2008, in which it highlighted the goal of 

increasing economic cooperation with cOLUltries in the region on investment, 

infrastructure construction, resources and energy, and debt reduction and 

cancellation. One indication of the importance of Latin America was the number 

of high-level visits to the region, including a visit by President Hu Jintao in 

November 2008 and the simultaneous visits of Vice President Xi Jinping and Vice 

Premier Hui Liangyu in February 2009. China's relations with countries in Latin 

America are largely economic in nature. Bilateral trade grew ten-fold between 

2000 and 2007, reaching $142 billion in 2008. Chinese companies import large 

quantities of raw materials from Latin America and export manufactured and 

consumer goods. The PRC is now Latin America's second-largest trading partner, 

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though it still lags far behind the United States, whose bilateral trade with the 

region stood at $664 billion in 2008. Brazil, Mexico, and Venezuela are the PRC's 

largest trading partners in the region. China has free trade agreements with Chile 

and Peru and is negotiating another with Costa Rica. In October 2008 the PRC 

joined the Inter-American Development Bank as a donor member with a 

contribution of $350 million. 

The following is a partial listing of the types of China's 2008 foreign assistance 

projects in Latin America, based on news reports or academic studies: 

• Brazil: PRC government-sponsored loan to fund a power plant and a belowmarket loan for oil exploration. 

• Chile: below-market loan/joint credit lines to fund ports, shipping, and 

mining investments. 

• Costa Rica: grant/donation to fund a stadium and oil refinery. 

• Cuba: below-market loan for hurricane relief and for hospital repairs. 

• Grenada: below-market loan to build a tourist manna. 

• Venezuela: below-market loan to fund infrastructure, electricity, health, and 

education investments. 

• Bahamas: below-market loan for a new airport highway and grants for 

development projects. 

• Costa Rica: donation of 200 police patrol cars to the Costa Rican Ministry of 

Public Security. 

u.s. Engagement with China on Foreign Assistance 

The United States continues to encourage China to coordinate its foreign assistance 

activities with other donor countries to prevent duplication and increase 

transparency. Over the past few years, the United States has tried to engage the 

PRC - bilaterally through State, Treasury, and USAID channels and multilaterally 

in the Pans Club and G-8 Heiligendamm Process - to discuss debt sustainability 

and development assistance best practices. The United States also continues to 

encourage the PRC to support the Extractive Industries Transparency Initiative as a 

multilateral forum for increasing transparency in the mining sector. Most recently, 

Secretary Clinton discussed U.S,-PRC development assistance cooperation at the 

U.S.-China Strategic and Economic Dialogue held in Washington in late July 

2009, during which she encouraged the PRC to work with the United States to find 

tangible ways to work togetber on foreign assistance. 

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The PRC is a signatory to the Paris Declaration on Aid Effectiveness, which 

encourages donor countries to adopt internationally accepted donor practices that 

support transparency, good governance, and sustainable development, but Beijing 

has not participated extensively in donor community discussions. The PRC 

recently has engaged in discussions with Britain's Department for International 

Development and is planning to send its officials on temporary duty to the OECD 

to learn about accepted international definitions of ODA. 

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