The question came up about China being both a recipient and giver of foreign aid. Actually this happens with many countries. On the face of it, this seems like an absurd and illogical situation, but it brings up interesting questions about these funny money flows. To understand this, we need to look at these transactions beyond the mere exchange of money in the bank, and we need not stop with foreign aid.

When countries or individuals give, it is not a simple money transaction, but it is to fulfill some economic, political, social, or moral directive. Economically, a household or a country may be both an investor and a borrower, as this may improve the rate of return. Politically, a country may use aid for leverage, and aid in this case is simply a mediator of complicated leverage relationships that happen to have cycles. Socially, much the same happens, except in this case it is a mediator of social cohesion and community. Morally, the decision to give may be completely independent of one’s own financial condition, and hence there is no dilemma; an excellent example is that a street-begger may also give, and in fact people are often moved by this. Something less dramatic is more evident: by living in a community, everyone is receiving some form of services of value, but that does not prevent that person from giving.

Sometimes, direct money transactions given in numeric terms tend to obscure the above points that, in retrospect, seem fairly obvious.

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