DFID and China - International Development Committee Contents


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 area—it 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 subject—and particularly the balance between loan and grant funding in UK assistance to middle-income countries—in 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 missed—health, 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 engagement—for 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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