China releases new framework for foreign aid

Jointly issued by the China International Development Cooperation Agency (CIDCA), the Ministry of Foreign Affairs (MOFA), and the Ministry of Commerce (MOFCOM) and came into effect on October 1, 2021, the guidelines clarify the scope of the program. foreign aid from China and the division of responsibilities between different ministries.

According to the guidelines, CIDCA has overall political and budgetary responsibility for China’s foreign aid program. MOFCOM is responsible for implementation and support, and MOFA is responsible for making recommendations on foreign aid in accordance with Chinese foreign policy as well as liaison and monitoring on the ground.

Foreign aid will be primarily project-based and approved by CIDCA, and the guidelines expressly provide for the possibility of collaboration with other countries, international organizations and non-governmental organizations on foreign aid. The guidelines also set out the procedures for ceasing or suspending foreign aid when a project cannot be implemented for reasons such as national security, force majeure or diplomatic reasons.

The guidelines identify the different types of foreign aid available with grants targeting disaster relief, social protection and humanitarian assistance, zero-interest loans targeting public infrastructure and industrial or agricultural production. , and concessional loans targeting productive projects with economic benefits, energy resources and projects and large infrastructure projects.

To ensure transparency and accountability, the guidelines contain specific provisions on whistleblowing, information gathering and auditing. Civil and criminal penalties may be imposed for certain acts or omissions, including corruption and dereliction of duty.

CIDCA was established in 2018 and is China‘s first independent foreign aid agency. The Export-Import Bank of China and CIDCA are the two bilateral creditors designated by China to participate in the G20 Debt Service Suspension Initiative.

The trial version of the Foreign Aid Guidelines released by MOFCOM in 2014 will end when the guidelines take effect on October 1, 2021.

Financial expert Kanyi Lui of Pinsent Masons, the law firm behind Out-Law, said, “MOFCOM had primary responsibility for administering foreign aid. Taking the form of grants or technical assistance and zero-interest loans, foreign aid-linked loans have accounted for around 5% of China’s total lending in recent years. The publication of the guidelines significantly clarifies China’s legal framework for providing foreign aid and marks the conclusion of the latest consultations and reforms of China’s foreign aid framework.

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