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Lawmakers criticize US aid to creditor China

FILE - In this Sept. 21, 2011 file photo, Asia and the Pacific subcommittee Chairman Rep. Donald Manzullo, R-Ill., presides over a subcommittee's hearing on Capitol Hill in Washington. Republicans and Democrats are criticizing the U.S. government's development agency for providing aid to Washington's main foreign creditor, China. FILE - In this Sept. 21, 2011 file photo, Asia and the Pacific subcommittee Chairman Rep. Donald Manzullo, R-Ill., presides over a subcommittee's hearing on Capitol Hill in Washington. Republicans and Democrats are criticizing the U.S. government's development agency for providing aid to Washington's main foreign creditor, China. (AP Photo Manuel Balce Ceneta, File)
By Matthew Pennington
Associated Press / November 15, 2011

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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.

The panel's Republican chairman, Illinois Rep. Donald Manzullo, claimed the clean energy program would boost the competitiveness of Chinese manufacturers at the expense of U.S. manufacturers and jobs, and in a sector where the U.S. has protested to the World Trade Organization over Chinese state subsidies.

He also derided USAID for supporting a multimedia campaign aimed at stopping the illegal trade in wildlife. The campaign is titled "Sex, Drugs, Rock and Roll -- and Wildlife."

"Can't you see why Congress is worried by the way you are spending the money," Manzullo told a USAID official. "What's sex got to do with it?"

Nisha Biswal, USAID assistant administrator, conceded that the title was perhaps "ill-advised" but said it was intended to convey the links between trafficking in wildlife and trafficking in narcotics and humans.

She defended the disputed aid to China as supporting U.S. values and interests, including for environmental protection. Almost one-third of California's particulate pollution can be traced to China, and 30 percent of mercury found in North American lakes comes from emissions originating from Chinese coal-fired power plants, Biswal said.

She said since 2006 -- during the administration of George W. Bush, and when Congress was under Republican control -- Congress had required USAID to maintain programs on rule of law and the environment in China.

"We have complied," Biswal said, adding that none of the programs directly funded the Chinese government or involved the transfer of technology.

She said the aid is designed to improve China's environmental law and regulatory system, and with support from U.S. companies offers training to Chinese factories on international environmental and health standards.

Biswal said the program also offers an opening to Chinese markets for U.S. businesses.

Participating companies include General Electric, Honeywell, Wal-Mart, Alcoa and Pfizer.