Debt-trap allegations push China to tighten reins on foreign aid programme

Beijing has drafted a new regulation designed to improve the management of its foreign aid programme amid allegations it has engaged in debt-trap diplomacy and that some of its investment projects have failed to benefit local communities.

The document, titled “Measure for the Administration of Foreign Aid”, was published on the website of the China International Development Cooperation Agency (CIDCA), which was set up earlier this year to evaluate and administer the nation’s aid programme. It will remain available for public comment until late December.

The document calls for the CIDCA and other government agencies involved in overseas investment to fully evaluate the projects with which they are involved. Its publication comes amid growing criticism of Beijing’s massive infrastructure investment across Asia, Africa and parts of eastern and central Europe that some observers have said has burdened recipient nations with debts they will never be able to repay.

While Beijing insists it does not attach political conditions to its investments or interfere in the internal affairs of recipient countries, it has been accused of using projects, especially those under its “Belt and Road Initiative”, to raise both its profile and influence around the world.

Even within China, questions have been raised about so-called vanity projects, such as luxury government buildings and sports stadiums, that come with massive price tags but do little to benefit the communities in which they are built.

One example of this is Mattala Rajapaksa International Airport in Sri Lanka, the South Asian island’s second-largest. Paid for by Beijing and built by Chinese contractors, the facility was designed to handle 1 million passengers a year, but in 2016 welcomed just 5,000.