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Lawmakers criticize US aid to creditor China

By Matthew Pennington

Associated Press

Published: Tuesday, Nov. 15 2011 4:52 p.m. MST

WASHINGTON — Lawmakers say it's an insult to the American people: The United States is borrowing money from China only to give some of it right back as foreign aid. And that, they say, is bolstering Chinese businesses that compete with American companies in hard economic times.

A House hearing Tuesday provided a venue for Republicans to pounce on the Obama administration when wasteful spending, questionable foreign aid and US-China relations are all hot issues ahead of next year's elections.

But an administration official told lawmakers there was no money going to the Chinese government or Chinese companies. In fact, it helped American companies trying to do business in China. And the idea for the aid? That actually came from Congress when it was under Republican control.

Aid to China — $275 million worth over 10 years — has been approved while control of both Congress and the White House has shifted between the parties.

But with America scrambling to reel in its $14.8 trillion national debt, the foreign aid budget has become a first casualty. Republicans are calling for steeper cuts to the $21 billion budget of the U.S. Agency for International Development.

Assistance to China makes up only a tiny fraction of the foreign aid total. This year's aid will be just $12 million, half that of 2010, but it's a prime target. China is the world's second largest economy, America's main foreign creditor, and blamed by both Democrats and Republicans for many of America's economic woes.

Tuesday's hearing of the House Foreign Affairs Asia subcommittee on the aid program offered plenty of red meat to China critics.

All six lawmakers to speak — five Republicans and one Democrat — expressed incredulity that the United States was still providing aid to China, which they accused of persecuting its people and stealing intellectual property from U.S. companies.

Rep. Brad Sherman, D-Calif., said U.S. foreign policymakers were out of touch with taxpayers. He said it was "an insult to the American people" and that aid should only go to democracy organizations in the communist-controlled country.

Rep. Dana Rohrabacher, R-Calif., used even blunter terms. He called it "pouring U.S. taxpayer dollars down the toilet."

Republican presidential contenders also have entered the fray. Former Massachusetts Gov. Mitt Romney has said that, if elected, he would seek to sanction China as a currency manipulator on Day One of his presidency. And Rep. Michele Bachmann of Minnesota has suggested that the U.S. is effectively helping to subsidize China's army with interest payments to China on the debt, which stood at $1.14 trillion, according to an October Treasury Department report.

Last month, there was bipartisan support for a bill to punish China for undervaluing its currency, which is viewed as hurting U.S. exports at a time when its manufacturing sector is struggling and unemployment is more than 9 percent. Lawmakers also have joined to condemn Beijing for human rights abuses, intellectual property theft and counterfeiting components that end up in U.S. military hardware.

The $12 million in funds requested by the Obama administration this year will be spent largely on fighting HIV/Aids and to help Tibet, whose exiled spiritual leader, the Dalai Lama, is widely respected in Washington.

But the panel was focused on $4 million of proposed funding for promoting clean energy, the rule of law, and to fight wildlife trafficking in China. The committee has put that aid, approved last year, on hold as it demands explanations from the USAID how the funds would be used.

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