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Can Aid Buy Foreign Public Support? Evidence from Chinese Development Finance

Author

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  • Wellner, Lukas
  • Dreher, Axel
  • Fuchs, Andreas
  • Parks, Bradley
  • Strange, Austin

Abstract

Bilateral donors use foreign aid to pursue soft power. We test the effectiveness of aid in reaching this goal by leveraging a new dataset on the precise commitment, start, and end dates of Chinese development projects. We use data from the Gallup World Poll for 126 countries over the 2006-2017 period and identify causal effects with (i) an event-study model that includes high-dimensional fixed effects, and (ii) instrumental-variables regressions that rely on exogenous variation in the supply of Chinese government financing over time. Our results show that the completion of Chinese development projects increases popular support for the Chinese government in recipient countries. In the short run, this effect increases with the size of the project and the generosity of the financial commitment; in the longer run, it is lower among people who live in close proximity to completed Chinese development projects. Analyzing the impact of Chinese projects on global perceptions, we find that Chinese development projects create a more favorable public opinion environment for China among countries in Africa, potential "swing states" in the United Nations General Assembly, and countries with higher baseline (ex ante) levels of public support for the Chinese government.

Suggested Citation

  • Wellner, Lukas & Dreher, Axel & Fuchs, Andreas & Parks, Bradley & Strange, Austin, 2022. "Can Aid Buy Foreign Public Support? Evidence from Chinese Development Finance," CEPR Discussion Papers 17128, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:17128
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    2. Fuchs, Andreas & Kaplan, Lennart & Kis-Katos, Krisztina & Leue, Sebastian & Turbanisch, Felix & Wang, Feicheng, 2025. "Tracking Chinese aid through China Customs," World Development, Elsevier, vol. 195(C).
    3. Alexandra Joosse & Ammar A. Malik & Sheng Zhang & Thai‐Binh Elston, 2025. "Networks of the Belt and Road: The Hidden Role of Financial Brokers," Journal of International Development, John Wiley & Sons, Ltd., vol. 37(4), pages 1019-1029, May.
    4. Nicolas Cerkez, 2025. "Extreme Weather Events and the Support for Democracy," CSAE Working Paper Series 2025-03, Centre for the Study of African Economies, University of Oxford.
    5. Christoph Nedopil & Mengdi Yue, 2024. "Does Green Overseas Investment Improve Public Perception in Host Countries? Evidence from Chinese Energy Engagement in 32 African Countries," Sustainability, MDPI, vol. 16(2), pages 1-14, January.
    6. Bau, Nicolas & Dietrich, Simone, 2025. "What geopolitical returns does ODA bring?," Kiel Working Papers 2305, Kiel Institute for the World Economy.
    7. Bunte, Jonas B. & Kinne, Brandon J., 2025. "Strategic interdependence in sovereign lending," European Journal of Political Economy, Elsevier, vol. 89(C).
    8. Austin Strange, 2025. "Influence and support for foreign aid: Evidence from the United States and China," The Review of International Organizations, Springer, vol. 20(3), pages 443-470, September.
    9. Andreas Freytag & Miriam Kautz & Moritz Wolf, 2024. "Chinese aid and democratic values in Latin America," Public Choice, Springer, vol. 198(3), pages 531-593, March.
    10. Vrolijk, Kasper, 2023. "How does globalisation affect social cohesion?," IDOS Discussion Papers 5/2023, German Institute of Development and Sustainability (IDOS).
    11. Luo, Changyuan & Song, Hong & Zhao, Yi, 2024. "Chinese aid and country image: Average and heterogeneous patterns," China Economic Review, Elsevier, vol. 85(C).
    12. Francisco Urdinez, 2024. "Undermining U.S. reputation: Chinese vaccines and aid and the alternative provision of public goods during COVID-19," The Review of International Organizations, Springer, vol. 19(2), pages 243-268, April.
    13. He, Xiaoyu & Zheng, Yawen & Chen, Yiwen, 2025. "Weapons and influence: Unpacking the impact of Chinese arms exports on the UNGA voting alignment," European Journal of Political Economy, Elsevier, vol. 87(C).

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    Keywords

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    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F59 - International Economics - - International Relations, National Security, and International Political Economy - - - Other
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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