The Ford Foundation has made a two-year, $350,000 commitment to AidData. The support will allow the lab to track the latest supply-side and demand-side trends in China's overseas development program. AidData will use the data and analysis that it generates to inform public debate and policy deliberations about the future direction of the Belt and Road Initiative (BRI).
“This new funding will allow AidData to stay on top of what is a rapidly evolving landscape,” said Brad Parks, AidData’s Executive Director. “Several seismic events—including the pandemic, Russia’s invasion of Ukraine, and a rapidly rising tide of debt distress in the developing world—have had far-reaching effects. In response, Beijing is re-calibrating how it deploys its sizable portfolio of state-directed loans and grants globally. It is pivoting from project lending to emergency lending and adapting to a new and unfamiliar role as the world’s largest official debt collector.”
With support from the Ford Foundation, AidData will expand the scope and granularity of its Global Chinese Development Finance Dataset, capturing the latest trends in China’s overseas lending and grant-giving activities. Greater emphasis will be placed on loan disbursements and repayments, reschedulings and defaults, rescue lending, acquisition financing, and public-private partnerships. The team will also take a closer look at the financial instruments that Beijing has used in its dealings with high-income countries.
Another point of emphasis will be the environmental, social, and governance (ESG) risks of BRI projects. “This is a hot topic, but one for which we don’t yet have adequate data,” said Ammar A. Malik, Senior Research Scientist at AidData who leads its Chinese Development Finance Program. “Chinese development finance institutions (DFIs) are already thinking about how to strengthen their ESG safeguards and more effectively manage debt sustainability risks. However, there are different ways that Beijing could go about de-risking its overseas project portfolio and responding to the ever-changing needs of partner countries.”
AidData researchers have seen some preliminary signals that Chinese authorities may seek to re-position and re-brand the BRI in the near future, potentially by channeling more funds through multilateral institutions and syndicated loan arrangements. “Harmonizing policies and practices with prevailing international development finance rules and standards would be a positive development,” said Parks, though he cautions that some multilateral DFI shareholders may be reluctant to work with China’s bilateral DFIs.
According to Samantha Custer, Director of Policy Analysis who oversees AidData’s Listening to Leaders program, understanding the supply of Beijing’s financing is only one part of the story. “Ultimately, the future of China’s BRI will also be shaped by the extent to which leaders in the Global South continue to demand what China is offering and how they assess the political, economic, social, and environmental trade-offs of Beijing’s development finance for their countries.” In this respect, AidData is uniquely well positioned to connect insights about how well China’s provision of development finance is keeping pace with evolving global demand. “Although early indications from our policymaker surveys underscore China’s continued dominance as a preferred partner for infrastructure,” Custer notes that “leaders are cognizant of stark trade-offs when it comes to perceived drawbacks of mounting public debts, increased corruption, and negative environmental impacts from these projects.”
With Ford Foundation support, AidData will use both traditional and experimental survey techniques to better understand leaders’ revealed preferences for development finance with different terms and conditions, implementation arrangements, and downstream impacts. Taken together, AidData’s demand-side surveys and supply-side tracking of China’s overseas spending provide a powerful way of forecasting Beijing’s likelihood of remaining a dominant player in the internal development finance market.
This new award follows on from a two-year grant that the Ford Foundation made to AidData in 2020.
“In recent years, the Chinese government has made considerable adjustments to its approach to overseas finance and investment, with more emphasis on collaborating with multilateral banks and international agencies, aiming at improving debt sustainability and the environmental, social and governance (ESG) impacts of these investments in the Global South,” said Elizabeth Knup, Regional Director and Chief Representative of the Ford Foundation’s Beijing Office. “Built on its strong database and analysis, AidData is in an excellent position to track these changes and to provide the readers, including the CSOs, scholars and policy makers in the Global South, with updated information and analysis on China’s overseas investments and its ESG impacts on the local communities in those countries.
“We believe that the information and analysis provided by AidData will help the relevant stakeholders in the Global South to make informed decisions with regard to China’s development finance projects in their countries to achieve sustainable development, hence contributing to global equity,” said Knup.
For more than ten years, AidData has produced novel data, tools, and analysis to understand China’s growing role and influence in the Global South. Its work on Chinese development finance seeks to encourage Chinese lenders and donors to voluntarily disclose detailed and comprehensive information about their overseas activities; identify opportunities for coordination with other donors and lenders; promote adherence to a common set of standards and safeguards; and help in-country governments evaluate the risks and benefits of new project proposals in order to negotiate more favorable terms and conditions. Its work on foreign policy influence uses cutting-edge, mixed methods research to pinpoint how China’s use of economic, information, and public diplomacy tools affects recipient countries in the Global South as well as its global influence.
Together, these research streams are delivered through primary data collection, policy and academic research, convenings of leading policymakers and scholars, a program of outreach to major media outlets around the globe, and custom analysis and advice to senior public sector decision-makers in the Global North and the Global South.