2011 August 07 Sunday
United States Still Provides China Development Aid

You might be shocked to learn the United States still provides development aid to China. Then again, you might already have adjusted your assessment of America's political elite low enough not to be shocked. (h/t Lou Pagnucco)

Washington, DC—Senators Jim Webb and James Inhofe, chair and ranking member of the East Asian and Pacific Affairs Subcommittee, today called for an end to U.S. development aid to China, now the world’s second-largest economy. Since 2001, the U.S. has provided more than $275 million in direct assistance to China for projects such as expanding internet access and improving public transportation. In addition, China receives billions from multilateral institutions like the United Nations, to which the U.S. is among the largest contributors.

“With more than $3 trillion in foreign exchange reserves and a double digit economic growth rate, China certainly has the financial resources to…care for its citizens without relying on U.S. assistance,” the Senators wrote to appropriators. “As the committee reviews current appropriations bills, we would request that in FY2012 you end all U.S. aid to China—other than programs that assist the people of Tibet or promote respect for human rights and democracy in China—and direct our representatives at international organizations to work to end multilateral aid to China.”

China currently owns $1.2 trillion of U.S. Treasury debt and has launched its own multi-billion dollar foreign assistance program to rival the U.S.

Both the United Kingdom and Australia announced this year that they will no longer provide direct assistance to China.

The bipartisan letter was also signed by Senators Kyl, Boozman, Levin, Reed, Manchin, Casey, Kohl, Rubio, Tester and Menendez.

To put that in perspective, in May alone the US ran a $25 billion trade deficit with China. Their leaders must be laughing at us. Our total trade deficit in May was $50 billion. We are in hock to the world and still giving out development aid.

China's not amused by our spendthrift ways. China's official news agency just sent out an editorial calling on the US to make substantial cuts.

In addition to recommending "substantial cuts" to "bloated social welfare costs" in America, the Xinhua editorial pointed to what it characterized as a "gigantic military expenditure."

Another quote from China's leaders:

China, the largest creditor of the world’s sole superpower, has every right now to demand the United States to address its structural debt problems and ensure the safety of China’s dollar assets

Since Bill Gross says the latest deficit reduction deal will have very small impact I think we are letting down our bankers in Beijing.

Share |      By Randall Parker at 2011 August 07 03:58 PM  China Mercantilism


Comments
Black Death said at August 7, 2011 6:28 PM:

There's an old saying - "Small loan - the bank owns you. Big loan - you own the bank." I wonder if we've reached that point with China yet?

Commenter said at August 8, 2011 8:03 AM:

Black Death,

If the US walks away from its debt obligations, China will simply nationalize "US-owned" industry and IP (as we persist in thinking of it) on its soil. I wonder how the economists will explain that in terms of gains from trade and comparative advantage?

Lou Pagnucco said at August 8, 2011 10:33 AM:

Are Americans in a state of learned helplessness, or suffering from the Stockholm syndrome?

Lou Pagnucco said at August 8, 2011 2:12 PM:

And not just China ---

US Foreign Aid To Nations Holding Billions In Federal Treasury Securities?

http://12160.info/profiles/blogs/us-foreign-aid-to-nations

Polynices said at August 8, 2011 2:37 PM:

We don't need to walk away from the obligations, we'll just run the printing presses full speed and inflate away all the debt they hold. Just you wait!


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