Casey: Stop Sending China Hundreds of Millions in Development Aid

WASHINGTON, DC— U.S. Senator Bob Casey (D-PA), Chairman of the Joint Economic Committee, today joined a bipartisan group of senators calling for an end to U.S. development aid to China, now the world’s second-largest economy.  Since 2001, the U.S. has provided more than $275 million in direct assistance to China for projects such as expanding internet access and improving public transportation.  In addition, China receives billions from multilateral institutions like the United Nations, the Asian Development Bank, and the World Bank, to which the U.S. is among the largest contributors. 

“With more than $3 trillion in foreign exchange reserves and a double digit economic growth rate, China certainly has the financial resources to…care for its citizens without relying on U.S. assistance,” the Senators wrote to appropriators. “As the committee reviews current appropriations bills, we would request that in FY2012 you end all U.S. aid to China—other than programs that assist the people of Tibet or promote respect for human rights and democracy in China—and direct our representatives at international organizations to work to end multilateral aid to China.” 

China currently owns $1.2 trillion of U.S. Treasury debt and has launched its own multi-billion dollar foreign assistance program to rival the U.S.

Both the United Kingdom and Australia announced this year that they will no longer provide direct assistance to China. 

The bipartisan letter was also signed by Senators Webb, Inhofe, Kyl, Boozman, Levin, Reed, Manchin, Kohl, Rubio, Tester and Menendez.

The text of the letter follows:

Dear Senator Inouye and Senator Cochran:

As you consider Fiscal Year 2012 appropriations bills, we are writing to urge the committee to re-evaluate the level of direct foreign assistance the United States provides to China.   Even as China has grown to become the world’s second-largest economy, since 2001 the United States has provided more than $275 million in development assistance to China.  In 2009, the most recent year for which data is available, U.S. agencies from across the government provided more than $65 million in grants to China.  China also continues to benefit from billions of dollars in development programs and infrastructure loans provided through multilateral institutions like the United Nations, the Asian Development Bank, and the World Bank to which the United States is among the largest financial contributors. 

We continue to believe foreign aid is a critical tool to promote both our foreign policy and our values, but given current fiscal realities at home, we need to be smarter and more strategic in allocating our resources.  Several of our allies and partners have come to the same conclusion this year, with both the United Kingdom and Australia announcing that they will no longer provide direct foreign assistance to China.    In view of China’s economic rise, it is clear that, with the exception of programs targeted specifically to Tibet or promote respect for human rights and democracy in China, the annual assistance we are currently providing to China could be better utilized in countries with greater need and vastly smaller resources.

Indeed, in recent years China has launched its own multi-billion dollar foreign assistance program to rival our own, prompting Secretary Clinton to testify before Congress in March of this year that, “we are in a direct competition for influence with China.”  In spite of this, the administration continues to seek millions in aid for U.S. assistance programs in China, including: 

• $7 million for HIV/AIDS prevention in China, more than for Thailand, Laos, and Burma combined.  These funds are in addition to the $940 million China already has received from the Global Fund to Fight Aids, Tuberculosis, and Malaria. 

• $4.7 million for  a Peace Corps volunteer program in China that is restricted by the  Chinese government to teaching English to university students.  Funding for this program has more than tripled since 2001 and now exceeds programs in countries of demonstrably greater need, such as Cambodia, Rwanda, and Sierra Leone.

• Continued access to Trade & Development Agency grants for projects ranging from improving broadband access in China’s rural areas, to expanding the Guangzhou metro rail systems, to training Chinese government officials in anti-monopoly law.  While the Trade & Development Agency plays an important role in linking U.S. business to export opportunities abroad, with bilateral trade in excess of $459 billion last year, this program could be better directed to identifying new markets in emerging economies for U.S. businesses.  

With more than $3 trillion in foreign exchange reserves and a double digit economic growth rate, China certainly has the financial resources to forego assistance from multilateral development organizations, which crowds out investment in higher-need countries, and to care for its citizens without relying on U.S. assistance.  As the committee reviews current appropriations bills, we would request that in FY2012 you end all U.S. aid to China, other than programs that assist the people of Tibet or promote respect for human rights and democracy in China, and direct our representatives at international organizations to work to end multilateral aid to China, including by directing those representatives to oppose all such aid.  Thank you for your consideration of this request.   

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