Appendix: Government Response
Poverty reduction
[Paragraph 29] 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.
Noted and agreed. The UK is working through several
initiatives, including this one with the ILO, to ensure that lessons
learnt from the Sichuan earthquake and from international best
practice are combined to improve future emergency responses, not
only in China but around the world.
Education
[Paragraph 37] 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.
Noted and agreed. Some of the lessons learnt in China
will have wider application in other developing countries too,
and the UK will work with the Chinese authorities to ensure that
the experiences are well disseminated. All programmes in China
involve mutual learning between China and the UK.
Health
[Paragraph 44] 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.
Noted and agreed. We recognise health sector reform
takes many years. We believe that UK/China cooperation on healthcare
has never been stronger. In addition to DFID's partnership with
China, the Department of Health can play an increasingly important
role in partnership with DFID and FCO. DH and other UK health
partners currently engage with China on a range of issues such
as public health emergency response systems, prevention and treatment
of infectious disease, hospital management, and community health
systems. There are opportunities to do more to support reform,
building on DH's Memorandum of Understanding on health with China
and the DH-led UK/China Partners in Health Innovation. We recognise
that there are significant benefits from pooling expertise and
sharing experience, knowledge and good practice in the health
sector.
HIV/AIDS
[Paragraph 51] 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.
Noted and agreed. The partnership with the Global
Fund and UNAIDS is particularly important in ensuring that this
necessary expansion of effective approaches takes place. UK-funded
technical assistance provides crucial support to the effective
use of the much larger financial resources being provided by the
Chinese Government and by the Global Fund.
Sanitation
[Paragraph 57] 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.
Noted. The UK Government will study, together with
other international partners, what more needs to be done to ensure
that China meets the sanitation MDG, and will then consider which
partners are best placed to work with China on this.
[Paragraph 58] 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.
Noted and agreed. However, the UK's investment in
sanitation in China to date has been very modest and has not yet
had significant influence on national policy. Continuing a sanitation
programme beyond 2011 would, if it is to be effective, require
substantial and long-term investment and more importantly strong
political will from the Chinese Government.
Water supply
[Paragraph 61] 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.
Noted. However, China is making good progress in
this area and is likely to meet the MDG target. DFID does not
have a comparative advantage in helping to increase rural water
supply, and the Chinese Government has adequate resources, and
is receiving adequate financial and technical support from the
World Bank and the Asian Development Bank.
Water resources management
[Paragraph 66] 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.
Noted and agreed. In recognition of the serious water
crisis, "implementing the strictest water resource management
system" was emphasized by the Chinese Government for the
first time in history at the 2009 national water resource working
conference. Although DFID-supported small-scale pilots have been
successful, scaling these new approaches up across the country
has yet to take place. With the new political will, there is a
new opportunity for scaling up. DFID's limited resources can be
used to introduce more innovative approaches to water resources
management and to sanitation and hygiene. Activities in these
areas can be a useful complement to ongoing work on the environment,
climate change and sustainable development. An important issue
will be water pollution, which is jeopardising the efforts to
provide safe water.
Sustainable development
[Paragraph 71] 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.
Noted and agreed. The Department for Environment,
Food and Rural Affairs (DEFRA) are very positive about current
arrangements and want them to continue. There are significant
areas of mutual interest between the SDD and DFID strategic priorities,
including cooperation on global food security, sustainable agriculture
and fisheries (including in selected African countries), forestry
resources management, and ecosystem services for poverty alleviation.
Climate change
[Paragraph 83] 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.
Noted. However, it is important to note that DFID
(which leads on adaptation to climate change) is part of the wider
UK government partnership with China on climate change and energy,
and works closely with the Department for Energy and Climate Change
(DECC), the Foreign and Commonwealth Office (FCO) and DEFRA among
others.
[Paragraph 84] 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.
Noted and agreed. The "weak link" in relation
to China's current approach to climate change refers to the inadequate
attention paid until recently to an understanding of the impacts
of climate change upon China and how best to adapt to these impacts.
Development in third countries
[Paragraph 91] 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.
Noted and agreed. The UK is pursuing a number of
areas for practical cooperation with China in Africa in the fields
of water resources, agriculture, and health and in peacekeeping.
UK Government strategy in China
[Paragraph 93] 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.
Noted. We agree that, with such a large network of
posts and with a variety of UK government actors represented in
China, ensuring that different areas of work are coordinated is
very important for the delivery of our objectives. The
policy document "China—a Framework for Engagement"
represents all the contributions of the many Government departments
which work on relations with China. Although none are singled
out for mention by name, all were consulted in its drafting and
all supported the document as it was published. The Strategy itself is
designed to set out in detail the objectives we are seeking to
pursue, and the development objectives were proposed by,
and agreed with, DFID.
A number of mechanisms ensure that effective
co-ordination of delivery of the strategy does take place. In
London, the High Level China Group, which brings together
Director-level representatives from all departments involved in
China, meets quarterly under FCO chairmanship. DFID plays an
active role in that group. In China all government departments
represented, including DFID, come together regularly to report
to the ambassador. Under the FCO's Departmental Strategic Objective
1, we are committed to ensuring that our posts in China provide
a flexible global platform for all departments including DFID
to do their business with China. We will continue to work to consolidate
and improve cross-departmental coordination.
China's engagement in Africa
[Paragraph 102] 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.
Noted and agreed. In bilateral dialogue, the UK encourages
China to engage with international initiatives aimed at promoting
development in Africa. China has actively engaged with the Infrastructure
Consortium for Africa and is playing a more active role in the
African Development Bank. The UK is keen for China and Chinese
companies to endorse the Extractive Industries Transparency Initiative
(EITI). The UK will work with a range of African countries so
that they make the case to China about why these initiatives would
be enhanced by China's participation.
Learning from China
[Paragraph 109] 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.
Agreed. Increasingly our work in China is guided
by explicit criteria that looks at relevant lessons for other
developing countries. A specific example of mutual learning between
the UK and China is the use of methadone in harm reduction programmes.
Ten years ago the UK introduced to two Chinese provinces what
was then a new approach, based largely on pioneering work in the
UK. China has now implemented methadone treatment across the country
and provides an example of good practice from which both developed
and developing countries can learn. China's use of methadone is
now more advanced than in the UK.
[Paragraph 110] 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.
Noted. Discussions on the food security action plan
are ongoing. The UK and China have agreed to finalise the plan
by the end of April 2009. The Chinese and the UK recognise that
this work will only be successful if it genuinely involves African
partners and stakeholders. Work on the conference is proceeding
well. A planning meeting will take place in May with UK, African
and Chinese experts, with the conference held in July in Beijing.
DFID's strategy for middle-income countries
[Paragraph 113] 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 116] 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.
Noted. We agree that, while DFID's poverty reduction
goal justifies our focus on low income countries, our work
with and in middle-income countries is also extremely important.
As part of our work on the new White Paper we are considering
how best to address this group of countries. There is no doubt
that middle-income countries are among our key partners in working
on all of the global challenges Britain faces, including climate
change, reform of the multilateral system and responding to the
financial crisis. But each of these countries is different
and it is not clear that a single strategy can any longer adequately
reflect the specific agendas we have with each of them. Equally,
there are a range of issues for the Government to consider in
deciding whether to maintain or establish programmes in middle-income
countries which continue to have high levels of poverty, and we
need to test further whether a single strategy can reflect these.
Meeting the MDGs in China
[Paragraph 120] 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 $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.
Noted. The Committee's recommendations for China
will be considered as part of the planning process for the next
Comprehensive Spending Round.
[Paragraph 121] 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.
Noted. The Committee's recommendations for China
will be considered as part of the planning process for the next
Comprehensive Spending Round.
DFID's relationships with policymakers in China
[Paragraph 125] 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.
Noted. The Committee's recommendations for China
will be considered as part of the planning process for the next
Comprehensive Spending Round.
Funding a post-2011 development relationship with
China
[Paragraph 130] 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.
Noted. The Committee's recommendations for China
will be considered as part of the planning process for the next
Comprehensive Spending Round.
[Paragraph 131] 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.
Noted. The Committee's recommendations for China
will be considered as part of the planning process for the next
Comprehensive Spending Round.
[Paragraph 132] 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.
Noted. The Committee's recommendations for China
will be considered as part of the planning process for the next
Comprehensive Spending Round.
The international benefits of a continuing development
relationship with China
[Paragraph 134] 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.
Noted. The Committee's recommendations for China
will be considered as part of the planning process for the next
Comprehensive Spending Round.
[Paragraph 136] 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.
Noted. The Committee's recommendations for China
will be considered as part of the planning process for the next
Comprehensive Spending Round.
The future development partnership
[Paragraph 137] 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.
Noted. The current DFID team will be retained in
place in Beijing pending the outcome for China in the Comprehensive
Spending Round.
[Paragraph 140] 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.
Noted. The Government of China has asked DFID to
sign a new Memorandum which will highlight the mutually beneficial
partnership and learning between China and the UK and the benefits
for other developing countries. We will look at this when the
outcome of the next Comprehensive Spending Round is known.
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