First, as international financial institutions and donor organizations seek to encourage stronger governance norms, aid from China has become an alternate source of funds. Recipient governments use these as a bargaining chip to defer measures that strengthen transparency and rule of law, especially those that could challenge elite power.

Cambodia is a telling example. The government in Phnom Penh, which has received substantial aid from the United States and other democracies, now receives comparable amounts from China. The Cambodian authorities have used this “assistance competition” to their advantage. Rather than combating corruption and implementing sorely needed reforms to the judiciary and media sector, Prime Minister Hun Sen’s government has shrunk space for alterative voices and independent institutions. Western donors, fearful of losing influence, have been increasingly hesitant to penalize the regime for its failures.

In October, the Guinean government announced a $7 billion deal with the China International Fund just as the international community was considering sanctions following a massacre of opposition supporters. The case underscores how even investments by a private entity, this one with ties to Beijing, can be manipulated to undermine efforts to support human rights standards.

Second, while “no strings attached” is commonly used to describe China’s approach in the developing world, the reality is not quite so benign. A combination of subtle and not-so-subtle conditions typically accompanies this largesse. Included among these is pressure to muzzle voices critical of the Chinese government, often undermining basic freedoms of expression and assembly in these countries. The authorities in Nepal, which have recently received a 50 percent boost in aid from Beijing, have violently suppressed Tibetan demonstrations, including the arrest of thousands of exiles in 2008. In December of last year, Cambodia’s government forcibly repatriated 20 Uighurs to China, where they face almost certain imprisonment and torture. Three days later, Beijing announced a package of deals with Cambodia estimated at $1 billion.

Even more democratically developed countries are not immune to such pressures. In March 2009, the South African government barred the Dalai Lama’s attendance at a pre-World Cup peace conference.