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From: Biniam Tekle (biniamt@dehai.org)
Date: Wed Jul 21 2010 - 08:32:52 EDT
http://www.npr.org/templates/story/story.php?storyId=128664027
Foreign Policy: China's Billion-Dollar Aid Appetite
by Jack C. Chow
Volunteers from Red Cross China take part in an AIDS-awareness event on
World AIDS Day. China has aggressively pursued Global Fund to Fight AIDS,
Tuberculosis and Malaria grants and has continued to win significant amounts
with every passing year.
July 21, 2010
*Jack C. Chow served as U.S. ambassador on global HIV/AIDS from 2001 to 2003
and was the lead U.S. negotiator at talks that established the Global Fund
to Fight AIDS, Tuberculosis and Malaria. He is currently distinguished
service professor of global health at Carnegie Mellon University in Heinz
College's School of Public Policy and Management.*
Back in 2001, I was the lead U.S. negotiator in international talks meant to
transform the way that poor countries fight some of the world's most
pernicious diseases — HIV/AIDS, tuberculosis, and malaria. Our vision looked
like this: Instead of each country spending on its own, rich countries would
pool donations into one coordinated fund that would give grants to help
resource-strapped countries purchase medicines, build health programs, and
prevent the diseases from spreading. We imagined the bulk of the money
ending up in places like Lesotho, Haiti, and Uganda, where these three
diseases have reached crisis levels. So it might surprise and concern you —
as much as it still does me — to learn that one of the top grant recipients
isn't in sub-Saharan Africa, Latin America, or impoverished Central Asia.
It's a country with $2.5 trillion in foreign currency reserves: China.
Over the eight years since the Global Fund to Fight AIDS, Tuberculosis and
Malaria first launched, China has applied for and been awarded nearly $1
billion in grants, becoming the fourth-largest recipient of funds behind
Ethiopia, India, and Tanzania. Already, the country has drawn nearly $500
million from this credit line and soon expects to receive $165 million in
new grants. China's aggregate award from the fund is nearly three times
larger than that of South Africa, one of the most affected countries from
these three diseases. Moreover, China has won malaria grant money totaling
$149 million (and $89 million more might be on the way) — in a country where
only 38 deaths from the mosquito-borne illness were reported last year. That
is more than the $122 million awarded to the Democratic Republic of the
Congo, which reported nearly 25,000 malaria deaths during the same period.
In fact, only seven sub-Saharan African countries receive more malaria aid
than China — and 29 countries in Africa get less. Combined, those 29
countries report 64,000 deaths from the disease each year.
China has aggressively pursued Global Fund grants and has continued to win
significant amounts with every passing year. Beijing does make a nominal
contribution to the fund of $2 million annually, meaning that it has donated
$16 million over the last eight years. By comparison, the United States, the
leading donor, has committed $5.5 billion, and France has offered $2.5
billion over the same period. These contributing countries expect no
financial return for their gift, but China has recouped its spending by 60
times.
Over the eight years since the Global Fund to Fight AIDS, Tuberculosis and
Malaria first launched, China has applied for and been awarded nearly $1
billion in grants.
Even more alarming, China's persistent appetite threatens to undermine the
entire premise behind the Global Fund. The organization's leadership is
trying to solicit between $13 billion and $20 billion to cover its next
three years of operations — a tall order at a time of global recession.
Donors will grow even more reluctant if they realize that substantial funds
are being awarded to a country that can more than pay for its own health
programs.
How did China ever become eligible for grants in the first place? In short,
because of a loophole. The Global Fund decides eligibility for grants based
on the World Bank's classification system, which divides countries by
income. High-income countries such as the United States, the European
industrial countries, and Japan are ineligible. Low-income countries,
including many in sub-Saharan Africa, are grant-eligible. In between,
so-called lower-middle-income countries like China are eligible if the
grants are part of a cost-sharing program through which the fund pays up to
65 percent and the country pays the rest. (China stays in this
lower-middle-income category because its huge population keeps per capita
figures down.) The country competes with the likes of Bolivia, Cameroon, and
India in this category. But because the fund's pot of money isn't allocated
by income group, any grants that China wins reduce the remaining money
available for all eligible countries.
For a country like Cameroon, cost-sharing grants make a lot of sense. By
giving part of the full amount, the fund can spur the host government into
investing more of its discretionary budget in health. The extra cash can
build health infrastructure and capacity, preparing the country to wean
itself from foreign funds. But in China's case, the argument for a Global
Fund grant is tenuous at best. During the depths of the world economic
crisis in 2008, China put forth a massive economic stimulus package of $586
billion that included new health and education spending of $27 billion. The
government announced its intention to boost rural health coverage with $125
billion in spending over the next several years. Even a fraction of that
promised amount would negate any need by China to draw upon the Global Fund.
This is not to say, of course, that China's health system does not face
formidable challenges. Indeed, global health policymakers worry that
HIV/AIDS and tuberculosis in particular could rise dramatically as the
country urbanizes and industrializes and a new middle class veers away from
traditional social mores. Everyone remembers the SARS outbreak in 2002 and
2003 that practically shut down major cities in China. And beyond specific
threats, the Chinese Center for Disease Control and Prevention, the chief
implementer of the Global Fund portfolio and officiator of the government's
public health strategy, has hard work ahead to build up China's health
workforce and medical infrastructure.
But China might want these grants for reasons having more to do with
politics than public health. The Health Ministry is the only member of
China's policymaking State Council not led by a political party member. As
such, its ability to compete for domestic funds pales in comparison with
other assertive, powerful ministries led by longstanding party leaders. So
the Health Ministry might be driven to external funding by political
necessity. Or, China might value obtaining the technical assistance of
international health agencies such as the World Health Organization, UNAIDS,
and the U.S. Centers for Disease Control and Prevention; Global Fund grants
provide a means of securing their advice and services. China's participation
on the fund's board might also be useful to Beijing's global politics,
confirming its importance on the world stage.
Whatever benefits China gains from seeking grants, however, stack up poorly
against expensive opportunity costs exacted upon needier countries. The $1
billion awarded to China could have been used by the poorest countries to
distribute 67 million anti-malarial bed nets, 4.5 million curative
tuberculosis treatments, or nearly 2 million courses of anti-retroviral
therapy for AIDS patients (a number equivalent to all those living with the
disease in Kenya).
It is intriguing that health ministers from the poorest countries have
expressed neither concern nor opposition to China winning grants. Nor has
there been any substantial public challenge to or debate about the money
China has received from the Global Fund. Part of the reason might be
structural; the fund's large 26-member board (which includes representatives
of countries, regions, organizations, and the Global Fund itself) operates
based on consensus, and its meetings are time-constrained forums that
pressure members to make rapid decisions. Changing eligibility policy, for
example to exclude China, would entail time-intensive negotiations that may
well pit groups of grantees against one another. The board also approves
grants en bloc, relying upon the advice of technical experts who review them
for feasibility and public health impact, not fairness, balance, or a
country's ability to pay.
Even so, there is likely more behind the silence than just procedure. For
many of the poorer countries that lose out, opposing China in international
forums would risk incurring Beijing's diplomatic wrath. Health ministers are
skittish to imperil their country's broader interactions with China, which
in the case of African countries, often entails Chinese loans, grants,
infrastructure projects, and investment — and indeed, even further, health
aid. In turn, African countries seeking access to the burgeoning Chinese
market must curry Beijing's favor. Any country that openly opposes China at
the Global Fund might see these economic links broken or be put at a
disadvantage to competitors. And so the neediest countries endure a loss of
grant money to China through their collective silence.
Donor governments have also been mute or reluctant to oppose China at the
Global Fund, perhaps for similar reasons of not wishing to provoke a
reaction that impacts other diplomatic or political equities elsewhere. In
the United States, neither Congress nor the White House has voiced open
concern that an amount equivalent to President Barack Obama's entire fiscal
2011 Global Fund budget request of $1 billion has gone to a country that can
afford to pay its own way.
This has left the fund's leadership as the only front left for trying to
change China's stance. Based on China's national income and the rate of
other donor contributions, the Global Fund recommends that China should give
$96 million over the next three years, amounting to 16 times its current
annual donation. In 2007, prior to China's hosting of a board meeting in
Kunming, the fund asked China's government to up its donor commitment, but
the appeal went nowhere. In June, with fundraising pressures escalating, the
fund's executive director, Michel Kazatchkine, met in Beijing with Chinese
Vice Premier Li Keqiang, who issued a vague promise to cooperate with
international organizations to expand disease prevention and treatment, but
made no announcement to refrain from taking new grants or signaled any
intent to become a major donor.
Not even a rival country's actions seem to have convinced Beijing. In recent
years, nearby Russia has transformed itself from recipient to donor, and it
has done so under arguably less favorable economic conditions than those in
China today. In 2006, then President Vladimir Putin pledged to repay the
Global Fund $270 million over four years, covering the past assistance it
received, and announced $156 million in new domestic spending for HIV
treatment. Now four years out, Russia has paid in $250 million to the Global
Fund, essentially fulfilling Putin's pledge.
It is audacious for China to assert that it needs international health
assistance on par with the world's poorest countries. In fact, at the same
time it is drawing from the Global Fund, China is building its entire global
image as one of economic growth, accumulating wealth and international
stature. To boost its public profile and prestige, China spent billions to
host the Beijing Olympics and the Shanghai World Expo. Surely it could spend
another $1 billion of its cash on health as well. And why not take it one
step further? By becoming a Global Fund donor, China could win acclaim with
the West and the world's poorest — earning exactly the kind of respect that
a rising power deserves.
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