Giving with one hand and taking it all back with the other

WINDHOEK, Namibia: It is not every day that global leaders set foot in this southern African nation of gravel roads, towering sand dunes and a mere 2 million people. So when the President of China, Hu Jintao, arrived in February 2007 with a 130-person delegation, it clearly was not just a courtesy call.China soon granted Namibia a big, low-interest loan, which Namibia tapped to buy $US55.3 million worth of Chinese-made cargo scanners to deter smugglers. It was a neat illustration, Chinese officials said, of how doing good in Namibia could do well for China, too.Or so it seemed until Namibia charged that the state-controlled company selected by China to provide the scanners – a company until recently run by President Hu's son – had facilitated the deal with millions of dollars in illegal kickbacks.And until China threw up barriers when Namibian investigators asked for help looking into the matter.Now the scanners seem to illustrate something else: the aura of boosterism, secrecy and back-room deals that has clouded China's use of tens of billions of dollars in foreign aid to court the developing world.From Pakistan to Angola to Kyrgyzstan, China is using its pool of foreign currency to cement diplomatic alliances, secure access to natural resources and drum up business for its flagship companies. Foreign aid is central to this effort.Leaders of developing nations have embraced China's sales pitch of easy credit – without Western-style demands for political or economic reform – for projects such as new roads, power plants and telecommunications networks – more than 200 projects since 2001..Increasingly though, pundits contend that China's aid comes with a big catch: it must be used to buy goods or services from companies that Chinese officials select. Competitive bidding by the borrowing nation is discouraged and China pulls a veil over data such as project costs, loan terms, and repayment conditions.Anti-corruption crusaders complain that secrecy invites corruption."China is using this financing to buy the loyalty of the political elite," said Harry Roque, a University of Philippines law professor who is challenging the legality of Chinese-financed projects in the Philippines."It is a very effective tool of soft diplomacy. But it is bad for the citizens who have to repay these loans for graft-ridden contracts."Some developing nations insist on independently comparing prices before accepting China's largesse. Others do not bother."Very often they are getting something they wouldn't be able to get without China's financing," said Chris Alden, a specialist on China-African relations with the London School of Economics and Political Science. "They presume that the Chinese are going to give value for money."