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China's Foreign Aid: Mutual Benefits and Win-Win

On May 12th, 2015, H.E. Mr. Deng Xijun, Chinese Ambassador to Afghanistan, published an article entitled China's Foreign Aid: Mutual Benefits and Win-Win in Daily Outlook Afghanistan. The article is attached as follows:

I. The Guideline of China’s Foreign Aid

China is the world’s largest developing country. In its development, China has been providing assistance to the best of its ability to other developing countries within the framework of South-South cooperation to support and help other developing countries, especially the least developed countries, to reduce poverty and improve livelihood. The basic principles China upholds in providing foreign assistance are mutual respect, equality, keeping promise, mutual benefits and win-win. In recent years, China's foreign assistance has kept growing. Asia and Africa are the major recipient areas of China's foreign assistance. To promote the realization of Millennium Development Goals, China directs most of its assisting funds to low-income developing countries.

II. Financial Resources and Forms of China’s Foreign Assistance

From 2010 to 2012, China appropriated in total 89.34 billion yuan (14.41 billion U.S. dollars) for foreign assistance in three types: grant (aid gratis), interest-free loan and concessional loan. Grant is mainly offered to help recipient countries build small or medium-sized social welfare projects, and to fund human resources development cooperation, technical cooperation, material assistance and emergency humanitarian aid. In the three years, China provided 32.32 billion yuan of grants, accounting for 36.2 percent of the total assistance volume. Interest-free loan is mainly used to help recipient countries construct public facilities and launch projects to improve people's livelihood. In the three years, China offered 7.26 billion yuan of interest-free loans, taking up 8.1 percent of its foreign assistance volume. Concessional loan is mainly used to help recipient countries undertake manufacturing projects and large and medium-sized infrastructure projects with economic and social benefits, or for the supply of complete plants, machinery and electronic products. In the three years, the concessional loans China provided to other countries amounted to 49.76 billion yuan, or 55.7 percent of its total assistance volume in the same period.

Up to now, China provided foreign assistance mainly in the following forms: undertaking complete projects, providing goods and materials, conducting technical cooperation and human resources development cooperation, dispatching medical teams and volunteers, offering emergency humanitarian aid, and reducing or exempting the debts of the recipient countries.

III. China’s Aid to Afghanistan

China is not the largest donation country to Afghanistan, but China’s aid is sincere and without any political conditions. In the 1950s and 1960s, although China was not better off at that time, it still built some aid projects such as Parwan Irrigation System and Kandahar Hospital for Afghanistan, which still function well in promoting the livelihood and welfare of local people. In recent years, China has been actively supporting the Afghan peaceful reconstruction. By the end of October 2014, China had provided 1.52 billion yuan of grants, trained nearly one thousand professionals in all fields through bilateral and multilateral channels, provided over 10 batches of goods and materials, built important projects such as Jumhoriate Hospital, Teaching Building of Chinese Language Department and Guest House of Kabul University, National Center of Science and Technology Education, and Multi-functional Center in the Presidential Palace for Afghanistan. All of these have played effective role in promoting the development and people’s livelihood of Afghanistan, and gained praises from all walks of life of Afghanistan. During President Ashraf Ghani’s state visit to China last October, China committed to provide 2 billion yuan of grants to Afghanistan from 2014 to 2017, and train 3000 professionals in various fields in the next five years. Not long ago, a working group from the Ministry of Commence of China held in-depth talked with the Afghan side in Kabul on how to make good use of the 2 billion yuan of grants. We hope the two sides could keep close coordination, and enhance practical cooperation to make sure the Afghan people could enjoy the benefit at an early date.

IV. China will continue to firmly support Afghanistan’s peaceful reconstruction

Chinese President Xi Jinping paid a successful state visit to Pakistan from 20th to 21st April, 2015. During the visit, the building of China-Pakistan Economic Corridor (CPEC) became one of the highlights, which also got much attention in Afghanistan. Many believe that CPEC will offer new opportunities for the promotion of connectivity of Afghanistan, China and Pakistan, and have great significance for economic development and exportation of energy and mineral resources of Afghanistan. However, there was some Afghan media which made simple comparison between the 2 billion yuan of Chinese grants to Afghanistan from 2015 to 2017 and the so-called 46 billion US dollars of Chinese investment to Pakistan which was only reported by some foreign media, commenting that China favors one more than another. I would like to make the following clarification in this regard: The spending for the construction of CPEC is mainly made up of business investments, project contracts, and even commercial loans, which are totally different from Chinese grants to Afghanistan. Therefore, the two figures are not comparable.

Afghanistan and Pakistan are both close and friendly neighbors of China. The stability and development of the two countries are closely related to that of China. Thus it is incumbent upon China to help Afghanistan realize peace and development. Just as Chinese Foreign Minister Wang Yi said during his official visit to Pakistan last February that to solve the issue of Afghanistan, reconciliation is the key and reconstruction is the root, that only with people’s farewell to poverty at an early date as a result of economic and social development can a brand-new future be brought to Afghanistan, and that the Chinese government is willing to work with the international community to be actively devoted to enhancing the capacity of independent development of Afghanistan. We will earnestly implement every solemn commitment made by the Chinese side in supporting Afghanistan’s reconstruction. China will work closely with Afghanistan to implement the package of assistance plans declared by Chinese leaders during President Ashraf Ghani’s visit to China last year. Furthermore, CPEC, located in where the Silk Road Economic Belt and the 21st Century Maritime Silk Road meet, is a major project of the “Belt and Road” initiative. China is willing to display the radiation effect of CPEC, jointly build the community of common interest and destiny with Afghanistan and Pakistan, and work together with the two countries for the regional development and prosperity.

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