China regards aid program a State Secret [1]
Tuesday, April 5, 2011 - 13:47. Updated on Monday, September 9, 2013 - 18:40.
CHINA still regards the details of its aid program as a state secret. The latest Lowy Institute policy brief provides a window into its opaque program, by reporting figures provided by individual recipient governments in the Pacific. The report gives China's aid program a mixed score.
Absent official Chinese government data, the report represents the most reliable figures available on China's aid giving in Australia's immediate neighbourhood.
The report's authors, Fergus Hanson and Mary Fifita write that "China has now become one of the Pacific's largest donors but its engagement has brought both challenges and benefits".
Hanson and Fifita note that "China has now pledged over $US 600 million in concessional loans to Pacific island countries, including over $US 180 million in 2009. Many of these countries may struggle to repay these debts and China appears to have increased the loan to grant ratio of its aid."
At least some Pacific governments appear to be accepting these loans with the expectation they will be forgiven in future, but there have already been reports of China refusing requests to cancel debt.
Tonga has already borrowed the equivalent of one third (32%) of its GDP from China, and the Cook Islands has had its credit rating downgraded by Standard and Poor's reportedly in part because of the loans it has taken from China to build sporting facilities.
There have been some positive developments as well. China's diplomatic truce with Taiwan, has allowed it to pull back from its overblown support for the regime in Fiji. There are early signs China is beginning to make greater use of local labourers in its aid projects and Pacific-China trade has been increasing. A survey of Pacific countries also revealed China follows through on its aid pledges, delivering most of what it promises. China has made some limited progress improving the transparency of its aid giving, although a lot more still needs to be done. Lowy Institute, 05/04/11.