Research On China's Aid To Africa And The Effect On Trade

As two main forms of bilateral economic cooperation. the relationship between foreign aid and trade draws attention of scholars at home and abroad. Many scholars abroad have made a great deal of theoretical and empirical analysis on the issue. While in China, there hasn't been specialized, systematic study due to the lack of foreign aid data. Because Africa is the main regions of China's foreign aid, systematically study to the China's aid to Africa and its trade effect is particularly necessary.This paper conducted in-depth research on China's aid to Africa and its trade effect from three parts. The first part comprehensively reviews the history over 50 years of China's aid to Africa, analyzes the necessity of the aid and the two main modes of aid as well as their management. The second part analyzes the trade effect of aid. According to the paper's analysis on specific data of China's aid and trade to Africa, the aid has not only a direct trade effect but also an amplified and multiplied trade effect. Direct trade effect refers to the effect that the export of related domestic supplies is stimulated by the material aid, preferential loans and joint venture cooperation of the projects to Africa. While the amplified and multiplied trade effect refers to the effect that the aid to Africa raises domestic products' visibility and the productivity, optimizes the structure of export commodities, broadens the African markets and enhances trade ability, etc. The third part with "Angola mode" as an example, analyzes the influence that the "preferential loans, resources, engineering package cooperation" aid mode of China to Angola to bilateral trade. Research shows that the preferential loans under "Angola mode" not only quickens the Angola's infrastructure and resources development, promotes Angola's economic development and oil exports, but also accelerate China's export of related materials, promote China's enterprises into Angola. It can be regarded as a successful practice which combines aid with trade. Finally, the paper puts forward with some meaningful suggestions in order to promote the common development of China's aid to Africa and bilateral trade.