Can China and the US get on the same anti-poverty page?

By Michael Igoe 02 October 2015
U.S. President Barack Obama offers a toast to Chinese President Xi Jinping during a state banquet at the Great Hall of People in Beijing, China. Can China and the US get on the same anti-poverty page? Photo by: Pete Souza / The White House

The traffic-freezing flurry of U.N. General Assembly speeches, side events, galas and papal sermons overshadowed one particular announcement, which should not have gone unnoticed this week, but mostly did: The United States and China agreed to greater cooperation in their global development programs — or at least to talk about greater cooperation.

In a new “memorandum of understanding,” government departments within the world’s two largest economies outlined initial steps to better align their engagement in the developing world. While no one is under the illusion that a nonbinding MOU will repair a contentious relationship overnight or deliver immediate humanitarian results, some officials and development experts are cautiously optimistic the document could be a first step toward greater openness and discussion at a crucial time when China is transitioning from aid recipient to aid donor.

Devex spoke to a senior U.S. administration official who explained that the impetus behind the new bilateral memorandum is to bring China, as a more participatory actor, into the international development architecture. The occasion of the Sustainable Development Goals underlined the need for partnership; but the official, who wished to remain anonymous to avoid a lengthy clearance process, noted that other international initiatives — the World Humanitarian Summit and the Global Fund to Fight AIDS, Tuberculosis and Malaria, for example — call for China to stand up as a more engaged participant in global development efforts than it has so far.

“My instinct is that this is a really important step, but an early step in the right direction,” said Paul O’Brien, vice president for policy and campaigns at Oxfam America.

The memorandum identifies key sectors for greater collaboration: food security, public health and global health security, humanitarian assistance and disaster response, and multilateral institutions. It also includes a caveat that it can be changed — or walked away from entirely.

Signatories to the MOU are the U.S. Agency for International Development’s Acting Administrator Alfonso Lenhardt and Chinese Minister of Commerce Gao Hucheng. China does not have a foreign assistance agency, and the senior administration official told Devex the possibility it might create one was not part of these discussions.

The MOU does create a framework for development experts from the two nations to communicate more consistently on the ground in third-party countries, and it opens the door to China’s participation in some of the donor meetings that more collaborative and closely aligned aid agencies regularly convene, the official said.

China has shown its ambition to emerge as a global development player but so far mostly on its own terms. From the U.S. perspective, the hope is that more open dialogue and some joint implementation will nudge China toward greater transparency and higher standards in the planning and execution of its development programs. For its part, China has long asked for a more equal seat at the table.

The MOU grew out of the countries’ joint economic dialogue, according to the senior official. Participants in those discussions have looked with more and more interest at areas of overlap in development assistance, and the most recent discussions in June saw the creation of a new development working group, the official said, adding that negotiations involved at least one trip to Beijing and took several weeks to finalize.

‘Eagle’ versus ‘dragon’

Often considered adversaries in a battle for developing market influence, the United States and China present markedly different versions of development assistance. While the former represents a Western aid system that ties delivery to specific demands, conditions and a lot of paperwork, China’s approach has been less restrictive. Chinese state-owned enterprises have moved aggressively into Africa and Latin America with development aid, investment capital and trade terms that typically value economic expansion over political, social and environmental concerns.

The memorandum of understanding stands as a rare bright spot in a recent string of highly visible misunderstandings. As a recent U.S. Institute of Peace analysis concluded, “Both nations’ directives leave ample room for interpretation and have added to mounting tensions. Because misunderstandings abound, identifying common ground is imperative.”

In the last year, the shape of China’s engagement as a global development power has taken on new urgency. The country has driven the establishment of two new development banks. One of them, the not-so-subtly named New Development Bank, has further united a bloc of emerging economies. Established by the BRICS countries (Brazil, Russia, India, China and South Africa), the New Development Bank has heightened anxiety among Western donors about the moral and economic authority they will wield over future development finance.

The emergence of the Beijing-based Asian Infrastructure Investment Bank, meanwhile, has made President Barack Obama’s strategic “pivot to Asia” more complicated. While several Western countries have joined the AIIB, seeking influence from within, the U.S. has resisted it. In June, 57 countries signed the bank’s charter. Now the China-backed institutions are moving forward without any U.S. involvement, and global development cooperation between the two nations has seemed increasingly unlikely.

According to the U.S. Institute of Peace analysis: “Both countries risk seeing the emergence of competing global institutions, which may result at best in wasted resources and at worst in deeper conflict and tensions across the developing world.”

Enter the unheralded MOU

The gaps between China and the U.S. are much wider than a two-and-a-half page document peppered with caveats could ever hope to fill. The interesting question about this MOU is whether it might represent a starting point for more intentional cooperation on specific development projects, and whether that starting point might grow into something bigger, like joint planning on major food security initiatives, for example.

The idea is to identify projects in specific countries that the United States, China and that third-party country will collaborate on more closely. The importance of “country ownership” echoes throughout the MOU.

The negotiations arrived at a couple of early-stage projects that might fit the bill. The two countries have already worked together on food security projects in East Timor, and the MOU seeks to expand that mutual effort. Perhaps more significantly, both China and the United States have separately discussed with the African Union the possibility of constructing an African Center for Disease Control. The proposal has been floating around for a while, with backers suggesting an African CDC could fill some of the health systems gaps with a shared resource for surveillance, lab testing and other capabilities not every African country is likely to develop on its own in the immediate future.

“Like many other things around health systems strengthening, before Ebola, there wasn’t any money,” said Wade Warren, senior deputy assistant administrator in USAID’s Bureau for Global Health. “Now there’s a lot more money … It looks to me like it is going to happen,” he added.

With this MOU, an African CDC appears firmly on the table, with support from both global powers. According to the senior administration official, cooperation on the project — which the official considers a potential signature early achievement of the MOU — would help avoid a situation where the two countries’ plans to support the project are at odds with each other and could help bring it to fruition more quickly.

The plan exemplifies one of the arguments for grounding U.S.-Chinese cooperation in health and development, instead of other foreign policy areas. It’s simply less controversial.

“We engage with [China] when we can. We encourage them to behave more like a regular donor, but they operate with different principles than we do, and sometimes I think they act like a regular donor when it suits them and then not other times,” Warren said.

“Of all the sectors where we try to engage with the Chinese I think health is one of the ones where we can be more successful,” he added.

For some anti-poverty activists, the fact that global development has emerged as the uncontroversial platform for U.S.-China cooperation is more than enough reason for cautious optimism. The MOU appeals to a constituency that has seen in the sustainable development agenda an unambiguous confirmation that partnership, not zero-sum competition, is the only pathway to ending extreme poverty.

“I can think of no better issue … on which we would like to see greater partnership of the two largest economies than in addressing the economic needs of underdeveloped countries,” O’Brien said. “If you’re an anti-poverty activist it’s pretty good to hear that these two powerful actors have decided to find common ground over poverty reduction.”

“I think it would be smart of both the USG and the development community to highlight the potential here,” O’Brien added.

The senior U.S. administration official reiterated that the MOU is merely an opening, which puts in place a framework for greater cooperation. The same caveats that allow either party to walk away from the document also allow them to modify it with new areas of collaboration to build out the relationship should it prove successful.

For now, apart from generally collaborating in the focus areas described in the memorandum, the two parties will participate in a “U.S.-China Exchange and Communication Mechanism on Development Cooperation,” which is expected to meet once a year. That “mechanism” certainly lacks the charisma of the sustainable development goals, but it might prove one of their early victories.

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