“China’s New International Development Cooperation Agency and Foreign Aid” by Lye Liang Fook

2018/24, 15 March 2018

One highlight of China’s National People’s Congress session in March 2018 is the restructuring of China’s State Council, or cabinet, to improve its governance and effectiveness. Among the proposed changes is the creation of a new state-level International Development Cooperation Agency (IDCA) that will integrate the foreign aid work functions of the Ministry of Commerce and Ministry of Foreign Affairs.

According to Xinhua, the official news agency, the IDCA is meant to give full play to foreign aid as a key means of China’s major-country diplomacy; strengthen the strategic planning and overall coordination of foreign aid; and better serve the overall needs of China’s national diplomacy and the Belt and Road Initiative. More specifically, the IDCA will be responsible for drafting strategic guidelines, plans and policies on foreign aid; making recommendations on major issues related to foreign aid; reforming the means of foreign aid; determining foreign aid projects as well as  evaluating their implementation.

China’s foreign aid program is not new. It has publicly stressed that its foreign aid program to developing countries began in the 1950s, soon after the founding of the People’s Republic of China, and at a time when it was short of funds and capacity. What is new in the recent restructuring is that China seeks to provide a more strategic and systematic overview of its foreign aid program through better planning, management, coordination and assessment.  IDCA’s creation reflects China’s active effort to shape a foreign policy that befits its role as a major power under President Xi Jinping. One of IDCA’s key thrusts is to provide a more coherent approach to frame, assess and even re-configure the details relating to Xi’s pet project, the Belt and Road Initiative rolled out since 2013 which the countries in Southeast Asia are involved in to varying extent.

China’s focus is to ensure the success of specific projects under the Belt and Road Initiative to not only generate positive momentum for this initiative but also provide a lasting legacy for Xi in the foreign policy domain. Moreover, with the removal of term limits for the presidency which the current National People’s Congress session has overwhelmingly endorsed, the countries in the region can expect China to pay even more attention and commitment to the Belt and Road Initiative.

However, it remains to be seen how effective the IDCA will be in assisting the Ministry of Commerce and Ministry of Foreign Affairs in their foreign aid programs. What seems clear at this juncture is that the IDCA is not a “frontline” agency in the sense that the implementation of China’s aid program will still be left to each of these ministries. Its role can perhaps be more accurately likened to a “think-tank” of sorts that offers fresh perspectives, provides assessments, recommends adjustments to China’s aid program, i.e. essentially looking at things from a broader and longer term perspective. It is still unclear how the interest of such a “strategic” agency can dovetail with the workings of the Ministry of Commerce and Ministry of Foreign Affairs that are preoccupied with “fire-fighting” matters on a daily basis. It is also uncertain how effectively the IDCA can coordinate China’s aid program across two different ministries with differing priorities and interests. The IDCA is not a full-fledged ministry although its head is likely to enjoy the same administrative ranking as a minister.

Mr Lye Liang Fook is Senior Fellow at ISEAS-Yusof Ishak Institute.

The facts and views expressed are solely that of the author/authors and do not necessarily reflect that of ISEAS-Yusof Ishak Institute.  No part of this publication may be reproduced in any form without permission.