Do trade and aid from China increase human rights abuses?

Yesterday, the New York Times lamented the worsening war in Sri Lanka, the rise in human rights abuses, and the emasculation of rights observers. “Gone are the Nordic monitors,” it writes, “independent journalists are not allowed anywhere near the front lines.”

Today, the blame is apportioned. “Take Aid From China and Take a Pass on Human Rights” proclaims the newspaper. The argument: unconditional aid and trade from China insulates regimes from Western mores and threats of sanctions in a dirty war.

China fear-mongering? Taking the story beyond the evidence? Maybe not.

The Times misses a paper posted last week by economists Erik Meyersson, Nancy Qian, and Gerard Padró-i-Miquel, but it gets the story right. Here newspaper anecdotes get support from some powerful statistics: trade with China predicts human rights abuses. At least in Africa.

Wait–caution is warranted. China potentially seeks out the resource rich nations where ties with the West are weak, so it’s difficult to sort out cause-and-effect; do nasty regimes choose to trade with China, or does trade with China encourage regimes to become nasty?

Enter the economists.

What is clever about this paper is that tries to isolate the variation in trade that is causal–running only from Chinese demand to increased output. To do so, the authors interact Chinese income growth with an indicator for whether a country has a particular resource, and use that to predict each country’s potential increase in Chinese demand for their natural resource (even if they don’t trade). The authors then examine the relationship between that predicted/potential trade and a number of national outcomes. That is, they find an exogenous instrument for increased trade with China.

The results: natural resource trade to China raises investment in extractive industries, jump
starts economic growth, has little effect on democracy, and leads to increases in human rights abuses.

“Trading with a cash-rich dictatorship seems to impose less constraints on African governments and this induces worse human rights records,” they conclude.

Of course, if we can isolate Chinese trade demand, we can do it for the U.S. as well. What effect does U.S. growth have on Africa? No change in growth, but a significant reduction of the role of the state in the economy. Democratic institutions improve (weakly) with no effect on the human rights record.

Surely the U.S. can aim to do better than that in the next Presidency?