New donors have emerged as significant players in our region, particularly China and Taiwan. However, other donor countries including Australia have expressed concern over both China and Taiwan’s use of so-called ‘dollar diplomacy’, exchanging aid funds for political and diplomatic purposes. Additionally, donor countries criticise China and Taiwan’s lack of cooperation with other donors and their ‘no questions asked’ approach to aid, which fails to encourage ‘good governance’ or engage with international aid effectiveness criteria.(11)

Beyond the Asia-Pacific similar criticisms of China’s aid have also been voiced by donors. Britain has warned that China’s unconditional aid and cheap loans in Africa risks driving countries back into debt and undermines efforts to create democratic and accountable administrations.(12) However, China has described its aid program as a “strategic partnership with Africa, featuring political equality and mutual trust, economic win-win cooperation”.(13) Whilst these criticisms may be legitimate it is important to note that many donor countries who are signatories to the Paris Declaration on Aid Effectiveness also continue to have their own political and economic motives embedded in their aid programs. In Australia this is evident in the continuation of informally tied aid and aid programs which are compatible with our own trade agenda.

Recently, both China and Taiwan have proved vulnerable to donor criticisms and have signalled an increased willingness toward international cooperation and away from their so-called ‘dollar diplomacy’ approach.

(11) ‘Strings Attached: China’s Pacific aid under the spotlight’ABC News, 22nd June 2008. Online http://
www.abc.net.au/news/stories/2008/06/22/2282018.htm , Accessed 12th September 2008
(12) The Guardian, ‘Chinese aid to Africa may do more harm than good, warns Benn’ 8th February,2007
(13) Ibid.

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