China's Aid and Rich Oil in Africa: Effects of Production and Prices





Published date: 

December, 2019


Szu-Ning Ping


As a new but popular donor, China has taken on more responsibilities for development in poor countries, especially in Africa. However, due to the energy shortage and non-traditional aid policies in China, international society believes that such benevolent behavior is just a means of gaining easy access to oil resources in the region. By using a new dataset, AidData's Global Chinese Official Finance Dataset (2000-2014, Version 1.0), this paper examines whether China's aid is related to African countries' oil production using panel data. In addition, the author also argues that the world oil price level affects China's decisions regarding aid because in addition to its national priority of pursuing energy, China's aid is predominantly delivered by dual-role state-owned entrepreneurs (SOEs) that not only implement government policies to maintain national energy security but who also endeavor to maximize their profits. Oil prices matter because high oil prices harm China's energy security and the benefits of its SOEs as well. The author tests these hypotheses among 54 African countries (2000-2014) using binary logit and random effects models and the statistical results show that higher oil prices and oil production encourage more aid decisions, either with regard to the amount of aid or as to whether to provide finance or not. Finally, this paper finds that these countries' economic performances also affect China's decisions regarding the amounts of aid.