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China and Australia: toward cooperative aid delivery

One of the notable recommendations of the Australian government’s Independent Review of Aid Effectiveness released in July was that Australia’s aid to China should be phased out.

The report and the Australian government’s response did not specify the time period likely to be involved, but the report made it clear that as China’s economic development continues, and its own aid program grows, Australia should focus its aid elsewhere. On the face of it, this might seem logical and help increase the palatability of Australia’s aid program to Australia’s public. But it needs to be remembered that Australia’s aid to China has a clear focus on enhancing the broader bilateral relationship (including enhancing cooperation between respective aid programs, thereby enhancing the effectiveness of each), and that China still faces deep development challenges in a number of areas which Australia can help address.

While the size and nature of China’s aid program has traditionally been shrouded in secrecy, the first White Paper on China’s aid program, released earlier this year, states that from 2004–09 China’s aid program increased by roughly 30 per cent each year. The White Paper also notes that China’s aid focuses on agriculture, economic infrastructure, public facilities, education, health care and, increasingly, climate change. Notably, the final section of the White Paper focuses on China’s ‘International Cooperation in Foreign Aid’, concluding that ‘China still has a long way to go in providing foreign aid’.

The Lowy Institute has been particularly critical about China’s burgeoning aid program in the Pacific, including on the capacity of Pacific island nations to absorb so much aid, and their capacity to sustain infrastructure built with Chinese aid. The level of Chinese aid as a proportion of GDP and the related ability of Pacific countries to service their loans has also been questioned. In 2009, China’s loans to Tonga were equivalent to 32 per cent of GDP, while in Samoa and the Cook Islands the figure was 16 per cent. Similar, if more intense, debate has emerged about China’s aid program in Africa.

All of this represents an opportunity for Australia. Given that China’s aid program shows no signs of slowing down, that Australia’s aid program is set to double by 2015 (to become the fifth-largest source of government expenditure), and there is overlap in the geographic scope of Australia and China’s respective aid programs, it makes sense that Australia should seek to enhance cooperation and dialogue.

To an extent, this is already being done. Two objectives in the China–Australia Country Program Strategy 2006–2010 had a broader remit than tackling poverty in China per se. Objective 3 focuses on enhancing bilateral institutional linkages, and Objective 4 focuses on working collaboratively to strengthen the region. A variety of Australian departmental and agency stakeholders are involved in achieving these objectives, with a clear focus on ‘building stronger relationships with stakeholder ministries and associated agencies, bringing increased trust and access’.

Such cooperation has a vital role to play in enhancing the effectiveness of Australia’s and China’s aid programs, not only in terms of what can be learnt through the exchanges but also in terms of reducing duplication and increasing complementarities — which, after all, are fundamental to delivering effective aid. It is also important that such cooperation occurs at the in-country program level as well, thereby reducing duplication and increasing program linkages.

Engaging China in regional development dialogues and structures is one way of enhancing cooperation. For instance, China is still not a member of the Cairns Compact, which was agreed to in 2009 by Pacific leaders as a means of enhancing development cooperation and effectiveness. Signing the Cairns Compact would be valuable for enhancing cooperation with China, and would also have an important symbolic impact: such a landmark cooperation deal would dispel some of the negative perceptions surrounding China’s aid program. In Africa, engaging China in discussions around cohesive, long-term strategies for economic growth will enhance the effectiveness of the aid programs of both countries.

It would also be wrong to dismiss China’s ongoing domestic development challenges. China’s economic growth is one of the great poverty-reduction stories of the past few decades, yet great disparities still exist and Australian expertise still has a role to play in tackling some of the more ingrained challenges. Environmental degradation, for instance, is a widespread consequence of economic development, and ongoing assistance from Australia in tackling these problems, and building China’s own capacity, is in everybody’s interests.

Sam Byfield is a Global Advocacy Advisor at Vision 2020 Australia, and was a delegate at the inaugural Australia–China Youth Dialogue in 2010.

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