Concessional loans are mainly used to help recipient countries to undertake productive projects generating both economic and social benefits and large and medium-sized infrastructure projects, or to provide complete plant, mechanical and electrical products, technical services and other materials. Concessional loans are raised by the Export-Import Bank of China on the market, and since the loan interest is lower than the benchmark interest of the People's Bank of China, the difference is made up by the State as financial subsidies. At present, the annual interest rate of China's concessional loans is between 2 percent and 3 percent, and the period of repayment is usually 15 to 20 years (including five to seven years of grace). By the end of 2009, China had provided concessional loans to 76 foreign countries, supporting 325 projects, of which 142 had been completed. Of China's concessional loans, 61 percent are used to help developing countries to construct transportation, communications and electricity infrastructure, and 8.9 percent are used to support the development of energy and resources such as oil and minerals.
III. Forms of Foreign Aid
China offers foreign aid in eight forms: complete projects, goods and materials, technical cooperation, human resources development cooperation, medical teams sent abroad, emergency humanitarian aid, volunteer programs in foreign countries, and debt relief.
Complete projects refer to productive or civil projects constructed in recipient countries with the help of financial resources provided by China as grants or interest-free loans. The Chinese side is responsible for the whole or part of the process, from study, survey, to design and construction, provides all or part of the equipment and building materials, and sends engineers and technical personnel to organize and guide the construction, installation and trial production of these projects. After a project is completed, China hands it over to the recipient country.
Complete projects are a major form of China's foreign aid. From 1954, China had helped Viet Nam and DPRK repair war-damaged railways, roads, ports, bridges and urban transport facilities, and assisted them in building a number of basic industrial projects, thus making great contributions to their post-war reconstruction and economic development. Later, foreign aid in complete projects expanded in scale and scope, and accounted for a bigger proportion among China's foreign aid expenditure. At present, they account for 40 percent of China's foreign aid expenditure.
By the end of 2009, China had helped developing countries construct over 2,000 complete projects closely linked to local people's life and production, covering industry, agriculture, culture and education, health care, communication, power supply, energy, transportation and others.
Goods and Materials
They include materials for production and living, technical products or single-item equipment, and necessary technical services covered by foreign aid financial resources provided by China.
China started foreign aid by providing goods and materials. In the 1950s and 1960s, China was short of goods and materials at home. But to help Asian and African countries win national independence and develop their economies, it provided these countries with a large amount of goods and materials. In addition, China provided supporting equipment and materials for complete projects. China always uses products of the highest quality for foreign aid, and the materials it provides include machinery, equipment, medical devices, testing equipment, transport vehicles, office equipment, food and medicine. These supplies meet recipient countries' urgent needs in life and production; and some equipment, such as civil airplanes, locomotives and container-testing equipment, have helped recipient countries improve their equipment capacity and develop their industries.
Technical cooperation means that China dispatches experts to give technical guidance on production, operation or maintenance of complete projects after they are completed, and train local people as managerial and technical personnel; to help developing countries grow crops, raise animals and process products on a trial basis, and teach local people China's agricultural technologies and traditional handicraft skills; and to help developing countries in inspection, survey, planning, research and consultation work of some industries.
Technical cooperation is an important means by which China helps recipient countries to strengthen their self-development capacity. It covers a wide range of fields, including industrial production and management, farming and poultry raising, handicrafts such as weaving and embroidery, culture and education, sports and physical training, medical and health care, clean energy development such as bio-gas and small hydropower generation, geological survey and prospecting, and economic planning. Technical cooperation projects usually last one to two years, and can be extended at the recipient country's request.
Human Resource Development Cooperation
Human resource development cooperation means that China, through multilateral or bilateral channels, runs different kinds of research and training programs for government officials, education programs, technical training programs, and other personnel exchange programs for developing countries.
China started to run such programs in 1953. From then until 1979, China hosted a large number of trainees from the DPRK, Viet Nam, Albania, Cuba, Egypt and some other countries, covering over 20 sectors including agriculture and forestry, water conservancy, light industry, textiles, transportation and health care. Since 1981, China has worked with the United Nations Development Program (UNDP) and hosted training courses in practical techniques in different fields for developing countries. In 1998, the Chinese Government began to run seminars for officials. The departments involved and the scale and scope of such training programs have expanded rapidly. By the end of 2009, China had run over 4,000 training sessions of different types for developing countries, attended by some 120,000 people, including interns, managerial and technical personnel and officials. These trainees were from over 20 fields, including economy, diplomacy, agriculture, medical and health care, and environmental protection. At present, roughly 10,000 people from developing countries receive training in China every year. Moreover, China has trained a large number of managerial and technical personnel for recipient countries by means of technical cooperation and other ways.
Chinese Medical Teams Working Abroad
China sends medical teams to recipient countries and provide free medical devices and medicines. These medical teams then provide location-based or touring medical services in those countries.
In 1963, China dispatched the first medical team to Algeria. So far, China has sent medical teams to 69 countries in Asia, Africa, Europe, Latin America, the Caribbean and Oceania. These teams usually work in underdeveloped areas where conditions are harsh and people lack medical services and medicines. These teams have cured many patients with common and frequently occurring diseases, and treated some complicated and serious diseases with acupuncture and moxibustion, medical massage and integrated use of traditional Chinese and Western medicine, saving many critically ill patients. They have also passed on their skills to local medical staff, helping improve local medical and health services. With sound medical skills, lofty medical ethics and a high sense of responsibility and mission, they have worked hard to serve the people of the recipient countries, and thus won respect and praise from the governments and peoples of these countries. By the end of 2009, China had altogether sent over 21,000 medical workers to other countries, and they have treated 260 million patients in the recipient countries. In 2009, 60 Chinese medical teams composed of 1,324 members provided medical services at 130 medical institutions in 57 developing countries.
Emergency Humanitarian Aid
Emergency humanitarian aid is provided when a country or region suffers a severe natural or humanitarian disaster. In such cases, China provides materials or cash for emergency relief or dispatches relief personnel of its own accord or at the victim country's request, so as to reduce losses of life and property in disaster-stricken areas and help the victim country tackle difficulties caused by the disaster.
Over the years, China has taken an active part in emergency relief operations in foreign countries, and has been playing a more and more important role in international emergency humanitarian relief. To make relief actions quicker and more effective, the Chinese Government formally established a response mechanism for emergency humanitarian relief and aid in foreign countries in September 2004. In December 2004, when a tsunami hit countries by the Indian Ocean, China launched the largest ever emergency relief operation in its history, providing 700 million yuan worth of aid to the disaster-stricken countries. In the past five years, the Chinese Government has provided on nearly 200 occasions emergency aid to foreign countries, including offering emergency technical aid to Southeast Asian countries for the prevention and treatment of bird flu; providing emergency aid in materials and cash to Guinea-Bissau hit by a locust plague and cholera, to Ecuador to fight dengue fever and to Mexico to fight influenza A (H1N1). It also assisted Iran, Pakistan, Haiti and Chile following severe earthquakes, Madagascar after a hurricane, Burma and Cuba following tropical storms, and Pakistan following a flood. In addition, it sent emergency food aid to the DPRK, Bangladesh, Nepal, Afghanistan, Burundi, Lesotho, Zimbabwe, Mozambique and other countries.
Overseas Volunteer Programs
China selects volunteers and sends them to other developing countries to serve the local people in education, medical and health care and some other social sectors. The volunteers now China sends mainly include young volunteers and Chinese-language teachers.
In May 2002, China dispatched, for the first time, five volunteers to Laos to provide services in education and medical and health care for half a year. By the end of 2009, China had dispatched to 19 developing countries, including Thailand, Ethiopia, Laos, Myanmar, Seychelles, Liberia and Guyana, 405 young volunteers who provide services in the fields of Chinese-language teaching, traditional Chinese medicine treatment, agricultural technology, sports and physical training, computer skills, international relief and so on. China has sent regular teams of volunteers to Ethiopia, Guyana and a few other countries. In 2003, China started to dispatch volunteer Chinese-language teachers to other countries. By the end of 2009, China had dispatched 7,590 Chinese-language teachers to over 70 countries around the world.
Debt relief means that China cancels the mature governmental debts of some developing countries that they owe China. China never urges indebted countries to pay back governmental debts. When recipient countries encounter difficulties in repaying due interest-free loans, the Chinese Government usually adopts flexible ways and extends the period of repayment through bilateral discussions. To reduce the debt burden on financially troubled countries, China has, on six occasions, declared that it would cancel debts incurred by mature interest-free loans owed to China by those heavily indebted poor countries and least developed countries which have diplomatic ties with China. Those occasions were the FOCAC First Ministerial Conference in 2000, UN High-Level Meeting on Financing for Development in 2005, Beijing Summit of the FOCAC in 2006, UN High-Level Meeting on the Millennium Development Goals in 2008, the FOCAC Fourth Ministerial Conference in 2009 and UN High-Level Meeting on the Millennium Development Goals in 2010. By the end of 2009, China had signed debt relief protocols with 50 countries from Africa, Asia, Latin America, the Caribbean and Oceania, canceling 380 mature debts totaling 25.58 billion yuan.