China and Foreign Aid

Scott Zuke

(Dec, 2011)  As of the end of November there have been a dizzying eleven GOP debates. Taken together, they form a nice pool of empirical data to show that our political debate format is poorly suited to convey thoughtful, nuanced arguments (not that we haven't known this for a long time). It is a medium suited best to soundbites, entertaining gaffes, and occasional heated exchanges over important policy disagreements. And while we can't fault candidates for oversimplifying their platforms when limited to 30 second rebuttals, it's important that they actually have a platform buried under all of the rehearsed talking points and platitudes.

Two issues that have received particularly unsatisfactory treatment from most of the GOP field so far are foreign aid and China. One-time front-runner, Gov. Rick Perry, drew applause by promising to reduce US foreign aid to zero from the start of his administration, and require recipient countries to reapply for funds by explaining their worthiness. Intended to appeal both to the sense of fiscal responsibility and toughness on the international scene, such a policy would have the opposite impact if ever actually implemented. First of all, countries aren't receiving US aid for no reason. It is always intended to support US objectives, either directly through diplomatic arrangement, or indirectly through supporting democratic trends and movements in autocratic countries, etc. Second, it's a cost-efficient means for promoting our interests abroad when compared to the alternatives, namely the use of coercive force. Third, we don't even spend that much money on aid, so its impact on the budget is minuscule.

I assume the candidates are well aware of this last point, but also of the fact that the US public has a severely skewed perception of the foreign aid budget. A widely circulated poll by World Public Opinion reported in 2010 that, "Asked to estimate how much of the federal budget goes to foreign aid the median estimate is 25 percent. Asked how much they thought would be an 'appropriate' percentage the median response is 10 percent. In fact just 1 percent of the federal budget goes to foreign aid." That makes aid appear to be a much juicier budget cut than it would be in reality, and it would of course also ignore the damage that would be done to America's influence and reputation overseas.

China is another topic where the candidates have vastly oversimplified or distorted the complexity of US policy. Considering the consistent 1-2% polling of Jon Huntsman, the one candidate with true expertise on the subject, the Republican party doesn't appear to be too interested in confronting China in more than cursory fashion. Perennial front-runner Mitt Romney has pandered to the public's fears of China's rise by promising to "get tough" on its currency manipulation and unfair trade practices. Michelle Bachmann has argued that US borrowing is funding China's military, and most of the candidates have at one time or another voiced dire concerns over China's growing military capability as a threat to American security.

This is by no means a baseless discussion--there are serious security issues in the Pacific that are complicated by China's rise, particularly with regard to US allies in the region that are feeling its shadow over them grow ever larger. And China's economic policies have put an unfair burden on other economies--not just our own, but also those of developing nations that lack the political or economic muscle to pressure China for needed reform. But this is exactly why we need more than posturing and rhetoric from our leaders. The US is no longer strong enough to achieve its objectives strictly through coercive force. Presidents know this well; candidates either don't, or won't admit to it. I assume the latter, and blame the media and viewing public for rewarding debaters for giving snappy, snarky soundbite responses to vastly complex questions.

Here's something, for example, that we probably won't hear in any of the debates this election cycle: China spends a huge amount of money on foreign aid and development in Africa, and increasingly in South America, and has been doing so quietly for decades. According to the Financial Times, in 2009 and 2010, it lent more money to developing nations than the World Bank. China has profited immensely from its investments, expanding its export markets while taking loan repayments in the form of natural resources (oil and minerals). It has also benefitted politically: its policy of strictly refusing to interfere in recipient countries' internal political affairs, or to attach conditionalities to aid, has earned it popular support from African nations that have become frustrated with the aid approach of Western donors.

The Chinese approach to aid has not been without its faults. Some infrastructure projects have suffered from shoddy workmanship, and the relationships between Chinese management and the indigenous workforces have not always been smooth, but these issues aren't unknown to the World Bank or the US Agency for International Development. On the other hand, it has found innovative approaches to avoiding some of the best-known pitfalls of Western aid programs, such as the problem of disbursing funds to corrupt governments that pocket the cash before it ever reaches the citizens. Rather than loaning funds directly to governments, China works closely with them to agree to infrastructural development plans, the construction of which are then awarded to Chinese construction firms. The result, while not perfect in some respects, is nevertheless beneficial to both parties, and helps to avoid the most harmful effects of corruption in the development process.

Unfortunately this isn't a discussion that fits nicely into the GOP's talking points or debate format. Congressman Ron Paul has recently used government corruption in developing nations as an argument for eliminating foreign aid expenditure all together. A more nuanced discussion of foreign aid and China policy could help us to avoid such shortsightedness.