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Searching for Global Cooperation in Sino-U.S. Relations: The Case of Foreign Aid

June 9, 2010

The Chinese government recently received a massive American delegation in Beijing when it hosted the second annual Strategic and Economic Dialogue (S&ED) on May 24-25. Led by Secretary of State Hillary Clinton and Secretary of Treasury Timothy Geithner, the 200-strong delegation included other cabinet secretaries, Federal Reserve Chairman Ben Bernanke, USAID Administrator Rajiv Shah, and experts on subjects ranging from energy to women’s issues. Although the dialogue did not achieve major diplomatic breakthroughs and unfolded amid rising tensions on the Korean peninsula, it did produce several memoranda of understanding on such topics as eco-partnerships and joint efforts to control infectious diseases.

Hillary Clinton in Beijing

U.S. Treasury Secretary Timothy Geithner (left) greets China's Vice Premier Wang Qishan (second from left) as U.S. Secretary of State Hillary Clinton greets Dai Bingguo, China's state councilor, fifth from left, prior to the opening ceremony of the S&ED in Beijing. SAUL LOEB/AFP/Getty Images.

By the closing session, the S&ED appeared to have served the intended purpose of improving inter-agency cooperation, facilitating high-level dialogue, and laying the foundation for deeper bilateral cooperation in the future.

The warm speeches and calls for enhanced cooperation contrasted sharply with the state of bilateral relations only a few months earlier, when the Sino-U.S. relationship hit an unusually bumpy period following disagreements over climate negotiations in Copenhagen and threats from China to punish the U.S. for a $6 billion weapons deal with Taiwan. Further exacerbating relations was President Obama’s February meeting with the Dalai Lama in Washington. Then, in early April, relations began to improve after China announced that President Hu Jintao would attend a nuclear security summit meeting in Washington later that month. The two presidents also met bilaterally during the summit, and China reportedly agreed to cooperate in developing new UN sanctions aimed at putting pressure on Iran over its nuclear program.

These oscillations in bilateral relations appear to reflect a continuing tension between concern for core interests, on the one hand, and the search for common global interests, on the other. This tension was illustrated in the concluding joint statements by Secretary Clinton and Chinese State Councilor Dai Bingguo. While State Councilor Dai called for strengthening coordination on major international issues – and referred to agency-level discussions at the S&ED on energy, security, climate change, and UN peacekeeping – he repeatedly stressed the importance of respecting each other’s “core interests” (hexin liyi) and major concerns. He said the two countries should “properly handle our differences and sensitive issues, especially those concerning China’s core interests such as Taiwan and Tibet-related issues, so as to consolidate the foundation of mutual trust.” Secretary Clinton was more expansive about the need to achieve “global progress” in her concluding remarks. Despite different histories, she said, “we share a responsibility for meeting the challenges of our time, from combating climate change to curbing nuclear proliferation and rebalancing the global economy.”

Sino-U.S. cooperation on climate change has thus far yielded mixed results, with concrete and encouraging cooperation emerging at the bilateral level but with each country pursuing divergent negotiating positions on the global stage. As the two countries continue their bilateral climate initiatives and plan for another round of international negotiations in December, this time in Cancun, what other global cooperation opportunities hover on the horizon?

One possibility is official development assistance (ODA). During the recent S&ED in Beijing, the two countries convened a plenary session on development issues and agreed to enhance communication and dialogue on these issues in the future. USAID Administrator Rajiv Shah also made a presentation at China Agricultural University (CAU) on USAID as a global partner in development. According to CAU’s website, which provided coverage of the May 24 speech, Shah called for advancing the UN Millennium Development Goals through cooperation with China, especially in the areas of health, education, food security, and women’s development. Bilateral discussions on foreign aid have taken place before at different levels, with stops and starts, but the latest manifestation at the S&ED appears to mark an appreciable step forward in Sino-U.S. engagement on this topic.

It is worth speculating whether such engagement reflects broader changes in China’s approach to foreign aid. As Chinese ODA has expanded dramatically over the past 10-15 years, particularly in Africa, China has preferred to make its contributions bilaterally rather than through multilateral channels or donor coordination efforts. China is not a member of the OECD’s Development Assistance Committee (DAC), which provides the most widely-recognized standards and definitions of ODA, and describes its ODA in terms of grants, interest free loans, and concessional loans (about which little data or information is available). In addition, China appears uncomfortable with the increasing emphasis that DAC countries place on good governance as a key ingredient of economic development; instead, it consistently refers to its own guiding principles of non-interference, mutual trust, and equality. These principles have sometimes put China at odds with other donors seeking to improve governance, promote rule of law, and reduce corruption in recipient countries.

There are signs, however, that China may be rethinking its approach to foreign assistance. Not only is Beijing diversifying its ODA to include emergency relief, medical assistance, and food aid, but Chinese representatives are attending donor meetings with more frequency than before. Chinese aid officials have also been reaching out to the OECD and selected bilateral ODA agencies to exchange information, and are working more closely with the World Bank and its private sector unit, the International Finance Corporation, in developing countries. Within the Ministry of Commerce’s Department of Aid to Foreign Countries, which is responsible for overall management of China’s foreign aid, there is now a separate division concerned with law and regulatory issues. Observers disagree on whether these changes are significant and what factors may be motivating them. At a minimum, they suggest that China is becoming more interested in how ODA works among more established donors and donor institutions.

These themes were echoed at a recent bilateral conference in Shanghai, hosted by Fudan University and co-sponsored by Fudan’s Center for American Studies, Pacific Forum CSIS, and The Asia Foundation. Convened just as the S&ED was closing in Beijing, the conference addressed both regional security trends and the prospects for enhanced bilateral cooperation on global governance issues. During the session on foreign aid, Chinese and American participants compared the differences between “new donors” and “old donors” and noted the contrast between the “hardware projects” favored by China, focusing on physical infrastructure, and “software projects” of OECD donors, focusing on governance reforms and capacity-building. They also identified a key difference in donor perspectives: whereas China prefers to promote economic development first, believing that institutions will follow, the U.S. and other OECD countries aim to build effective institutions at the outset to optimize the prospects for sustainable development.

Despite these differences, conference participants exhibited a keen interest in sharing more information on foreign aid and promoting greater cooperation between China, the U.S., and other donor countries in the future. Taken together, the S&ED in Beijing and the Fudan conference in Shanghai appear to have set the stage for enhanced discussion and collaboration on ODA. Continuation of these dialogues would not only be in the common interest of China and the United States, but could contribute in constructive ways to ongoing global debate about the role and effectiveness of foreign aid in the developing world.

Jonathan Stromseth is The Asia Foundation’s Country Representative in China. He can be reached at jstromseth@asiafound.org.cn.

View all posts by Jonathan R. Stromseth

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