Map of China, by US State Department. Will China export the social credit concept to America? That's one export we definitely should block with a tariff! Map of China, by US State Department. Will China export the social credit concept to America? That's one export we definitely should block with a tariff!

China development assistance should stop

A US Senator said yesterday that China development assistance from America should stop. In fact, America could do better than that.

China development assistance from the USA

Senator Jon Tester (D-MT), now calling for an end to China development assistance
Senator Jon Tester (D-MT). Photo: US Senate

Senator Jon Tester (D-MT) made his case in a letter yesterday to the chairman and ranking member of the Senate Committee on Appropriations. For good measure, he also addressed the chairman and ranker of the State Department subcommittee. Twelve Senators signed the letter. They included both Democrats and Republicans. (Among them: Senators Robert Menendez, D-NJ, and Marco Rubio, R-FL.)

The total amount of aid seems paltry, in comparison to the total State Department budget: $275 million over ten years, including $65 million in China development assistance in 2009 alone. But Tester’s biggest surprise is that China has launched its own foreign-aid program. The spectacle of China taking US taxpayer money to pass on to other countries is worse than ironic. Tester and his colleagues know it. They want their fellow Senators to know it, too.

With more than $3 trillion in foreign exchange reserves and a double-digit economic growth rate, China certainly has the financial resources to forego assistance from multilateral development organizations, which crowds out investment in higher-need countries, and to care for its citizens without relying on US assistance.

Tester did not mention in his letter that China holds more US debt paper (Treasury bills, notes and bonds) than does any other single country. But Jim Webb admitted the irony to Fox News correspondent Neil Cavuto late this morning. Cavuto likened it to “giving a charitable donation to the bank who holds your mortgage.” Webb agreed.

A better idea

Tester’s letter called for stopping the flow of money to China and spending it somewhere else. But the Senate could do better than that. Why not leave the China development cash flow as it is, but send it out as direct debt repayment instead of a grant? In short, redeem some of those bonds!

True enough, the government cannot “call” a Treasury bond or note. To call a bond is to redeem it at once and in full, whether the bondholder wants to present it for payment or not. But the State Department can certainly tell the Chinese that the deal will now be different. They can have their China development assistance funding at the same level. But they must surrender some of the US government bonds they hold to get it.

The government should deal with every country that gets US foreign aid, while still holding US bonds, on the same terms. A borrower does not offer charity to his lender. He pays his lender back.

The money involved might not amount to much. But it’s something. Why should the USA keep the China development assistance policy going, while still owing money to China? Why would any borrower keep doing anything like this?

Featured image: a map of China. Photo: US Department of State.

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Terry A. Hurlbut has been a student of politics, philosophy, and science for more than 35 years. He is a graduate of Yale College and has served as a physician-level laboratory administrator in a 250-bed community hospital. He also is a serious student of the Bible, is conversant in its two primary original languages, and has followed the creation-science movement closely since 1993.

debt, economy, global economy, politicians


Terry A. Hurlbut

Terry A. Hurlbut has been a student of politics, philosophy, and science for more than 35 years. He is a graduate of Yale College and has served as a physician-level laboratory administrator in a 250-bed community hospital. He also is a serious student of the Bible, is conversant in its two primary original languages, and has followed the creation-science movement closely since 1993.

Comments (2)

  • I don’t know what the nature of the aid program is, but that notwithstanding I’m in total agreement on this topic.

    Unless there is a natural disaster like a major earthquake, there’s no reason for non-emergency aid to flow to one of the world’s major economies like this. The program and any like it should be reassessed and canceled.

    My only alternate suggestion would be that instead of automatically reinvesting the funds into debt repayment, we consider investing them in very specific, very targeted and accountable relief programs for hard-hit areas in the U.S.A. With so many other items in the news, it’s easy to forget the major damage to areas in the U.S. heartland that were devastated by flooding earlier this year. A dollar spent on repaying out debt is a good thing, but a dollar invested in helping our fellow Americans rebuild their towns, stores, schools, etc. so they can realize their full potential and contribute to the economy again would be wiser, in my opinion.

    Simply stated, if we invest these redirected funds in our own economic development, our long-term ability to pay down our debt will be greater than if we just hand it back now.

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