HOW CHINA IS USING GOVERNMENT AID TO INCREASE THE PRODUCTION IN CHINA
The Chinese Government is distributing government aid to countries that contain something of interest to them. What is of interest? That is described in the countries strategy document: Catalogue for Guidance of Foreign Industries. Content can be anything from rare metals, over supplies for energy production to food items.
An agreement between a Chinese lender and a country is signed with the purpose to increase the sales of Chinese products and services to that country. The country’s government then forwards the funds in form of a budget to government entities or in form of a cheap loan to private companies. These might then have to choose Chinese vendors, who can deliver products that contain a certain degree of Chinese content. The degree can vary, depending on the lending bank. The usual lenders are the Chinese Development Bank, ExIm Bank and in recent years also Sinosure (actually an insurance for international trade).
How can you find out if there are Chinese Government Aids distributed in a country?
1. Check the local media: The government aid agreements typically get announced publicly after an official visit of the president or other senior officials.
2. Check the trade statistics: You will see if China is importing certain products.