Canadian Manufacturing

Are U.S. aid efforts bolstering Chinese business?

Republican lawmakers are suggesting cash sent by Obama is increasing competition between U.S. and Chinese businesses



WASHINGTON—The U.S. is borrowing money from China only to give some of it back as foreign aid, which is making some speculate that the U.S. is actually bolstering Chinese businesses to compete with its own in a tough economic climate.

A House hearing on Tuesday provided a venue for Republicans to pounce on the Obama administration as wasteful spending, iffy foreign aid and U.S.-China relations are all hot issues ahead of next year’s elections.

But an Obama administration official has told lawmakers there was no money going to Chinese governments or companies, saying the dough went to 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—was approved while both Congress and the White House were run by the G.O.P.

And while the U.S. scrambles to reel in its $14.8 trillion national debt, the foreign aid budget has become a casualty. Republicans are demanding steeper cuts to the $21-billion U.S. Agency for International Development budget.

But assistance to China makes up only a tiny fraction of the foreign aid total.

This year’s contribution aid will be $12 million, half that of 2010.

China has the world’s second largest economy, is America’s main foreign creditor and is blamed by both Democrats and Republicans for many of America’s economic woes.

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