(iPoster) China’s Foreign Aid and Workers’ Rights

• In Event: Poster Session: International Political Economy I & Perspectives on Canadian Foreign Policy
  In Poster Session: Poster Session: International Political Economy I

Abstract

How does Chinese aid affect labor standards in developing countries? Over the last two decades, China has emerged as one of the major donors of development finance, especially with the launch of the Belt and Road Initiative and the Asian Infrastructure Investment Bank (AIIB). Given the structural differences between Chinese developmental projects and traditional official development assistance (ODA) from OECD countries, a growing body of research has examined the political and economic implications of Chinese aid. However, there has been relatively scant attention to the link between China’s development finance and labor in developing countries. The current study seeks to fill this gap by identifying the mechanisms under which Chinese development finance affects labor rights in recipient countries. On the one hand, Chinese aid might increase levels of respect for labor rights if development projects are concentrated on economic and production sectors that promote public good provision and developmental outcomes. On the other, Chinese aid might exert negative influences on labor rights, serving as a source of additional tax revenues. In this case, recipient governments are less likely to respond to the demands of workers and unions, especially when the Chinese government seeks to curry favor with recipient governments for its strategic interests. The paper tests these hypotheses, using multiple datasets on China’s global development finance and the Center for Business Research (CBR)’s Labor Regulation Index in 102 developing countries from 2000 to 2023. The results show that China’s foreign aid tends to undermine labor rights in recipient countries. The relationship between Chinese aid and labor rights is also conditioned by other contextual factors, such as the strength of unions and the sectoral allocation of Chinese development projects. These findings remain robust when we control for the potential endogeneity of Chinese aid allocation.

Author

• Su-Hyun Lee, Nanyang Technological University, Singapore