Australian aid officials query depth of China's spend

Updated June 22, 2009 16:19:45

Australian aid officials have questioned impressions that China has boosted aid to Fiji since the December 2006 coup. But they have underlined how difficult it is to determine what's aid and what's not in China's spending in developing countries like Fiji, and the need to get greater clarity from China. The issues have been raised at an inquiry in the Australian capital Canberra, from where our correspondent Linda Mottram reports.

Presenter: Linda Mottram
Speakers: Dr Jane Lake, Australia's international development assistance agency, AusAID; Dr Benjamin Reilly, Centre for Democratic Institutions.

MOTTRAM: Fiji's 2006 coup has posed the question for many countries of how they can to continue to give aid to support the people of Fiji without inadvertently propping up the unelected, military-led regime. But at an Australian Parliamentary committee hearing in Canberra, some Australian Senators have wanted to know whether China is stepping in where others are stepping back, amid widespread suspicion of China's aid motives. Doctor Jane Lake is a senior official from Australia's international development assistance agency, AusAID.

LAKE: The Fijian government has been reannouncing some of the things that China has been talking about for some time. But the actual flows from China, the real flows from China, to Fiji is not probably as large as the Fijian government or the Fijian interim regime might sor of say.

MOTTRAM: Since China doesn't publish overseas development assistance figures, the official says its difficult to know whether Chinese aid to Fiji overall is increasing. Indeed it remains difficult to separate Chinese aid from other investments in developing countries. A recent analysis by the Sydney-based Lowy Institute for International Policy calculated that China's aid pledges to Fiji increased seven fold from 23-Million U-S dollars in 2006 to 161-Million in 2007. There's talk of projects like rural roads and new low cost housing but overall what's known attests to a continuing lack of clarity and transparency in China's spending in the developing world.

LAKE: They have spent money on the construction of a bridge which was completed in May 2009 for about five-Million dollars, there's been a contract signed between the Chinese Development Bank and the Fiji Electricity Authority, that's a large one, for U.S. 70-Million dollars to finance a hydropower project but its not clear where that fits into a general soft loan amount. There's speculation about Chinese support for production of ethanol from Cassava. But there's not a lot of sort of in a sense concrete information. (q) But they're pretty significant proposals aren't they? (a) Yes.

MOTTRAM: Liberal Senator Alan Ferguson put it to Doctor Lake that where others might be reducing commitments to Fiji, China was increasing aid, filling the void and gaining influence. Doctor Lake says actual Chinese spending seems to fall short of what's promised. And she told the committee the perception of increase Chinese aid to Fiji in particular since the coup is inaccurate.

LAKE: The China commitment actually came before, a couple of months before the 2006 coup and there could be a sort of a sense about that is going quite slowly.

MOTTRAM: On the quality of China's development assistance, AusAID is working with Beijing and the World Bank trying to forge a partnership to encourage Chinese agencies to adhere to the OECD's Development Co-operation Directorate guidelines on aid. The project is based on work done by the U-K's Department for International Development also with the World Bank and China on China's aid to Africa.
Observers are hoping that one recent development may help in the Pacific. Doctor Benjamin Reilly from the Canberra-based Centre for Democratic Institutions told the committee he was optimistic about Taiwan's declaration of an end to competition with China using aid to recruit the support of small states.

REILLY: If that becomes a permanent truce that's going to change for situation facing countries like Solomon Islands quite significantly because a lot of the, let's call it aid money but it's not really aid money its often direct payments to politicians, a lot of that in the past few years has been generated by this China-Taiwan competittion and if that went away, that would be a very good thing. It might not be a good thing for some of the individuals who are pocketing the cash but it would be a good thing in terms of political stability.

MOTTRAM: But Doctor Reilly says the big challenge in the region is aid co-ordination. That issue is certain to be discussed at the Pacific Islands Forum leaders meeting in Cairns in August.