Conclusions and recommendations
Poverty reduction
1. We
were highly impressed with the joint DFID-International Labour
Organisation Start and Improve Your Business (SIYB) project. DFID
and the ILO have achieved a huge multiplier effect for their investment
following the Chinese Government's expansion of the project from
14 initial cities to more than 100, making this the largest job
creation scheme in the world. We were pleased to hear that the
high quality technical assistance provided by DFID had played
a key role in the expansion of the scheme. We were also very pleased
to see that an adapted SIYB project had been launched as part
of the emergency response to the May 2008 earthquake. We encourage
DFID to ensure lessons from this particular application of the
scheme are effectively transferred to the Chinese government so
that they can form part of future emergency responses. (Paragraph
29)
Education
2. We
were struck in the two schools that we visited in China by the
impact of DFID's work in education in poor areas of China. DFID
has targeted its support effectively towards marginalised children,
prioritising interventions that specifically address the needs
of poor rural children, ethnic minorities and girls. We were particularly
impressed with the school-based planning and child-centred learning
techniques that DFID has helped to implement successfully. We
welcome the Department's approach of demonstrating the effectiveness
of innovative approaches to education at the micro-level, and
then handing over such projects to the Chinese authorities to
scale up. This approach has achieved a real and positive impact
on the world's largest education system and benefited millions
of children and communities. It is also exploring innovative methods
of teaching which could be applied in neighbourhoods of educational
under-achievement in the UK. (Paragraph 37)
Health
3. We
commend DFID's efforts to help influence health sector reform
in China over the last decade. During our visit, we saw evidence
of the substantial challenges facing China in ensuring access
to quality healthcare for all, especially poor people in rural
areas of western provinces. Over the last decade, DFID has successfully
supported small-scale pilot projects, including a medical financial
assistance scheme enabling poor families to pay for healthcare,
that have fed directly into the design and implementation of national
reforms to the health sector. DFID is now using the relationships
it has built up with Chinese policymakers to work directly on
health policy. (Paragraph 44)
HIV/AIDS
4. Within
certain groups of the Chinese population, the country's HIV rate
is high and is growing. Infection could easily spread within the
general population. We believe this is a worrying situation that
requires urgent attention. We were impressed to hear about the
achievements of DFID's HIV/AIDS Prevention and Care project (HAPAC).
Again, DFID seems to have achieved a 'demonstrator effect' by
pioneering replicable models that have subsequently been scaled
up at national level. We commend DFID for this, and for committing
£30 million to a new joint project with the UN and the Global
Fund to Fight AIDS, Tuberculosis and Malaria that will build on
the experiences of the HAPAC. We were highly impressed with the
methadone maintenance treatment clinic, funded by the new project,
that we visited in Chengdu. It demonstrates the effectiveness
of innovative approaches to HIV treatment and care, and the benefits
of multi-sectoral co-operation. However, the project is on a small
scale and we recommend that DFID continue to promote the replication
and expansion
of initiatives of this kind.
(Paragraph 51)
Sanitation
5. We
are very concerned about the extremely low coverage of basic sanitation
in China, especially in rural areas. Given China's relative overall
wealth, it is striking that one in four people worldwide without
access to sanitation and water lives in China. The Chinese Government
needs to dramatically increase its efforts in order to boost both
China's and the international community's efforts to reach the
sanitation MDG target by 2015. We believe this will require urgent
investment in a full range of policy responses designed to achieve
a rapid and sustainable expansion of access to sanitation. We
urge DFID to do all it can to support this enhanced effort. (Paragraph
57)
6. The DFID-supported
Rural Water Supply, Sanitation and Hygiene Education programme
is a good starting point. We understand that, whilst the project
will only benefit 750,000 people directly, DFID's approach of
demonstrating successful pilots is likely to lead to greater impact.
But given DFID's wide international experience of implementing
sanitation initiatives, including at community level, we believe
it could do more in China. This is likely to necessitate support
being provided after 2011, the projected date for the withdrawal
of DFID's bilateral aid programme in China, especially if the
MDG 7 target on sanitation is to be met by 2015. (Paragraph 58)
Water supply
7. Nearly
a quarter of China's population has no access to clean drinking
water. The number of people without access to clean water in rural
areas of China is equivalent to the total number of people in
Africa without access to water. Whilst we credit DFID's support
to water supply under the Rural Water Supply, Sanitation and Hygiene
Education programme, we are concerned that this support will end
in 2011. China's ability to improve access is crucial to whether
the MDG 7 target, seeking to halve the proportion of people without
access to safe drinking water by 2015, will be met. We therefore
believe that continued DFID support is likely to be needed beyond
2011. (Paragraph 61)
Water resources management
8. China
is facing a water crisis, with its already limited resources under
further strain from the processes of rapid economic growth, industrialisation,
urbanisation and climate change. DFID deserves credit for its
role in ensuring that the 2002 Water Law prioritised integrated
water resources management, and for its current efforts in helping
to implement the Law in two water-scarce river basins. We were
pleased to note that DFID is paying attention to building demand
for improved water resources management and particularly commend
its introduction of water user associations which simultaneously
build local capacity and promote more equitable sharing of water
resources between communities. (Paragraph 66)
Sustainable development
9. We
support the cross-departmental UK-China Sustainable Development
Dialogue (SDD). DFID's position as lead UK department within China
has been a driving force in the SDD's success. We believe that
it is essential that pressure is maintained on the Chinese Government
to address sustainable development issues such as illegal logging
and sustainable agriculture. DFID's reputation and experience
in China has enabled it to build highly effective working relationships
across the Chinese government on these issues. If lead responsibility
within China was transferred to another UK Department, it could
take many years for them to develop similarly effective relationships.
We recommend that, assuming the SDD is renewed for another three-year
phase for 2012-15, DFID should continue to lead the Dialogue within
China on behalf of the UK. (Paragraph 71)
Climate change
10. We
believe that DFID will need to continue to play a primary role
in supporting China's responses to climate change after 2011.
DFID is the only donor with a comprehensive approach to climate
change in China. It has spent a number of years building trusted
relationships with the Chinese Government in this crucial areait
would be a risky and inefficient use of resources to give up this
influence at this important stage of international climate change
negotiations. (Paragraph 83)
11. We reiterate our
recommendation that DFID continue to lead the UK-China Sustainable
Development Dialogue within China between 2012-2015. We further
recommend that DFID continue its current valuable support to development
aspects of both mitigation of and adaptation to climate change
after 2011. This should include monitoring the £50 million
allocated from the Environmental Transformation Fund and supporting
China to use potential resources from the Clean Energy Investment
Framework and the Strategic Climate Fund. We recommend that particular
attention is paid to a 'weak link' in China's current approach:
research and policy analysis on climate change. DFID's continued
support to work on climate change in China should take place within
a co-ordinated UK Government approach across all relevant departments.
(Paragraph 84)
Development in third countries
12. We
support DFID's dialogue with China on international development
issues, and the decision to underpin the process with funding
and staff resources in Beijing. DFID-supported research about
the relationships between China and African countries is a useful
step towards greater understanding about international development.
It is essential that the UK continues to strengthen this dialogue
and begins to move it beyond discussion into practical collaboration
in third countries. We believe that on the ground co-operation
in developing countries, particularly those in Africa, could help
ensure that the benefits of UK and Chinese approaches are mutually
reinforcing. (Paragraph 91)
UK Government strategy in China
13. We
were surprised that the new UK Government framework document on
engagement with China, launched in January 2009, did not mention
DFID despite the fact that international development issues are
an integral part of the Strategy. We fail to see how these development
issues can be effectively implemented, or how a coherent UK Government
strategy can be operated, without a clear delineation of departmental
roles. We are concerned that this may lead to confusion and poor
co-ordination. We urge the UK Government to ensure that all Departments
working in China have a clear understanding of the interaction
between their different areas of work and the importance of co-ordinating
their activities. (Paragraph 93)
China's engagement in Africa
14. Whilst
there are many positive aspects to China's increasing investments
in African countries, there are also concerns regarding: transparency;
sustainability; the capacity for equal partnership; weak adherence
to safety, labour and environmental legislation; and governance
and human rights. Finding the most appropriate way to address
these concerns is a matter for the Chinese Government and the
governments of African states. However, we believe that, within
its wider work on governance issues, DFID should continue to help
to build the capacity of African governments to regulate foreign
investors and enforce labour and environmental legislation. We
believe that DFID should also promote greater Chinese involvement
in multilateral initiatives, including those relevant to private
sector development such as the UN Global Compact and the Infrastructure
Consortium for Africa, and those focused on the natural resource
sector, such as the Extractive Industries Transparency Initiative.
(Paragraph 102)
Learning from China
15. China
offers many lessons about economic growth and poverty reduction
for other developing countries. The learning process between donors
such as DFID, China and third countries is a mutual one: there
are many opportunities for DFID to develop ideas from both China's
development and from the Department's own work in China, which
it can subsequently use in its programmes elsewhere. Significantly,
specific innovative development pilots to eradicate poverty could
also be trialled in the UK. (Paragraph 109)
16. We consider agriculture
a priority area for lesson-sharing between China and other developing
countries, especially those in Africa. We were pleased to hear
that an agreement was reached at the UK-China Summit in January
2009 to strengthen co-operation between the UK and China on food
security, including agricultural research, and that the two countries
will host an international meeting on agriculture co-operation
that includes officials and experts from African countries. We
urge DFID to press ahead with implementing this new agreement
as quickly as possible, and request that we are kept up-to-date
with progress on organising the international meeting. (Paragraph
110)
DFID's strategy for middle-income countries
17. In
our report on DFID's 2008 Annual Report, published in February
2009, we recommended that DFID clarify and publish its policy
for engagement with middle-income countries (MICs) as a matter
of urgency, following the expiry of the previous strategy in 2008.
As we said then, the short statement that we have received is
no substitute for a properly articulated and publicly available
strategy for this crucial grouping of countries. We are disappointed
that a successor strategy for MICs is not in production. As DFID
itself highlighted in its previous strategy, middle-income countries
are critical to the achievement of the Millennium Development
Goals because of both the high levels of poverty which remain
in some MICs and the influence they can have on global policies.
We reiterate our recommendation that DFID urgently develop and
publish a new MIC strategy to govern its policy and expenditure
in these countries. In this context, we recommend that serious
consideration is given to the use of loans as a funding tool in
China and other middle-income countries. We intend to return
to this subjectand particularly the balance between loan
and grant funding in UK assistance to middle-income countriesin
the near future. (Paragraph 113)
18. We agree that
DFID should give high priority to working with large and influential
middle-income countries that have the potential to make a significant
impact on poverty reduction in other countries. There is also
still substantial poverty in China. We therefore support DFID's
decision to devote a proportion of its 10% MIC allocation to China.
(Paragraph 116)
Meeting the MDGs in China
19. We
understand that many other developing and middle-income countries
face challenges resulting from global problems such as the financial
crisis and climate change. We also understand that China's per
capita GDP, at US$1,713, is relatively high, representing around
three times the aggregate rate for low-income countries. However,
given the vulnerability of many people in China to falling back
into poverty, we believe that it may be premature and unworkable
to reduce DFID's role to an advisory one, focused on international
development and climate change, only a few years before the Millennium
Development Goal deadline in 2015. (Paragraph 120)
20. MDG targets on
sanitation, HIV/AIDS and TB remain off-track in China. Overall
progress on other targets, such as child mortality and access
to clean water, mask huge regional disparities. We reiterate our
praise for DFID's achievements in China in catalysing progress
on the MDGs. Its approach of demonstrating small-scale pilot projects
in education, HIV/AIDS, health, sanitation and water has been
highly successful. But the job is not complete. The Department
has particular expertise from elsewhere in the world that it could
bring to bear in these sectors. We therefore believe that leaving
China just four years before the MDG deadline of 2015 would not
make sense. DFID still has considerable value to add to China's
efforts over the next five to six years, especially in terms of
introducing innovative approaches within specific sectors and
sharing international expertise. (Paragraph 121)
DFID's relationships with policymakers in China
21. DFID
has gradually built successful and influential relationships with
Chinese policymakers, at both the provincial and national level
and across a range of sectors. Building the right relationships
is the only route to securing influence in China. We believe that
DFID's relationships have been hard-won and well-developed, and
that the Department is possibly the only donor to have forged
such influential links on development with the Chinese Government.
We recommend that, having spent considerable time, effort and
money forging these connections, DFID should avoid weakening them.
We believe that this is another strong reason for DFID engagement
to continue beyond 2011. (Paragraph 125)
Funding a post-2011 development relationship with
China
22. We
believe that maintaining the influential relationships that DFID
has built over the last decade will require not just staff resources
in Beijing but a funding element. The reality is that participating
in discussions about development in China is only practicable
if financial resources are attached. We believe that the amount
of funding would be secondary to the ideas, expertise and innovation
that DFID brings to the table in China. Any funding that is provided
will undoubtedly unlock significantly larger amounts of Chinese
money and thus is likely to be highly cost-efficient. (Paragraph
130)
23. Sanitation and
water coverage is still very low in China, and this jeopardises
progress towards the achievement of all the other MDGs. We believe
there is a strong case for DFID to continue to fund small-scale
pilot projects in these sectors in the run-up to the MDG deadline
of 2015, using its proven approach of demonstrating innovative
ideas at the micro level. Whilst it is for DFID, rather than us,
to calculate exact costs of what interventions are needed and
where, our initial judgement is that £7-8 million over three
years would enable a scaled-down version of DFID's integrated
sanitation, water and hygiene project to run from 2012-2015. (Paragraph
131)
24. We hope DFID might
also be able to continue discrete, scaled-down pilot projects
in the other sectors that risk seeing MDG targets being missedhealth,
HIV/AIDS and education. We estimate that another £7-8 million
over three years to cover the three sectors would allow several
valuable small-scale 'demonstrator' projects in these sectors
to continue to 2015. (Paragraph 132)
The international benefits of a continuing development
relationship with China
25. We
believe that retaining an office in Beijing would have multiple
benefits for DFID's approach to helping reduce poverty both in
China and internationally. Having a presence on the ground would
enable DFID to continue its process of learning with and from
China. DFID would be able to continue to innovate in its support
to basic services such as education, health, sanitation and water,
and these innovations could then be replicated elsewhere by both
the Chinese and UK Governments. We believe that assisting China's
ability to explore solutions for its own development may influence
China's developmental approach overseas, and provide openings
for discussions about China's international engagementfor
instance, with African countries. (Paragraph 134)
26. We believe that
an integral part of the continuing development relationship with
China would be helping this huge country to develop sustainably.
The path that China chooses, in terms of carbon emissions, energy
use and its sourcing of natural resources, will strongly affect
the international community's efforts to address climate change.
In fact, we believe that the costs of not helping China to develop
sustainably are likely to be higher to the UK taxpayer than continuing
a programme of support. We estimate that the likely cost to DFID's
bilateral assistance allocation would be several million pounds
between 2011 and 2015, with other funding coming from alternative
channels, including DFID's research budget and from China's own
resources, which the UK could help leverage. (Paragraph 136)
The future development partnership
27. We
believe that DFID's capacity to strengthen its crucial dialogue
with the Chinese Government over international development issues
would be greatly assisted if the Department retained an office
in Beijing. Working from Beijing would help to provide DFID with
accurate and up-to-date information about China's engagement with
African and other countries, and ensure that it better understands
China's approaches. This can only assist the process of moving
from dialogue to practical collaboration in third countries. It
is also likely to help DFID promote greater Chinese participation
in multilateral development frameworks. (Paragraph 137)
28. Finding the right
terminology for a continuing DFID relationship with China is important.
We believe the exact term is for DFID to determine but suggest
that descriptions such as 'development partnership' convey the
co-operative spirit that would be at the heart of the continuing
relationship. We reiterate that this new partnership needs to
be underpinned by a financial commitment of around £5-10
million annually over three years, linked to specific programmes,
and should include the retention of a DFID office presence in
Beijing. (Paragraph 140)
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