This chapter investigates the motivations of recipient governments who seek out Chinese development projects. We examine how host country leaders shape the ways that Chinese development finance is allocated across subnational jurisdictions. First, we evaluate whether China’s allocation of aid and debt within countries flows to areas with higher levels of socioeconomic need. Second, we explore whether political leaders manipulate incoming financial flows from China to advance their own political interests. We do so by examining whether and when funds from Beijing favor the home provinces of political leaders. Finally, we compare and contrast the ways in which Chinese and World Bank development projects are subnationally distributed. To do so, we assign latitude and longitude coordinates to the specific locations where China implemented its de- velopment projects.Our findings indicate that Chinese development finance does not go to the geographic areas within recipient countries where it is most needed: much of it ends up in wealthier provinces. In addition, Chinese development projects favor politically privileged jurisdictions: the home provinces of political leaders receive substantially more Chinese development finance in countries with competitive elections, and even more at election time. This is a problem from a development perspective because the average home province of a political leader is significantly wealthier than the rest of the country.

In this chapter, we use the new data to investigate which factors influence the allocation of Chinese development finance across countries, and how these motivations compare to those of traditional donors and creditors such as the World Bank. We specifically test the claim that Beijing is primarily using its economic largesse to cement alliances with political leaders, secure access to natural re- sources, and create exclusive commercial opportunities for Chinese firms. We run statistical models to examine the cross-country allocation of Chinese aid and debt, arguing that these two flows are motivated by different strategic objectives. Our results show that Chinese aid and debt are means to different ends. Like Western donors, Beijing allocates aid in response to levels of poverty and uses aid to reward countries that adopt its foreign policy positions and punish those that do not.Contrary to the conventional wisdom, Beijing is no more likely than major Western donors to provide aid to corrupt or authoritarian regimes. None of these findings are consistent with the notion that China is a “rogue donor” compared to its Western peers. However, Beijing’s loans issued at or near market rates are more likely to go to corrupt and authoritarian countries. The conflation of aid and credit seems to be at the heart of the confusion: Western politicians and journalists use “rogue donor” as a shorthand term for all of China’s overseas development projects, but many of these projects are not aid.