China 'exploits loophole' to beat African countries to World Bank aid money

Despite its $2.4 trillion of foreign reserves, China is the fourth-largest recipient of aid money, worth $1 billion (£640 million), from the World Bank Global Fund to Fight AIDS, Tuberculosis and Malaria, behind Ethiopia, India and Tanzania.

The fund was set up eight years ago for rich countries to pool their donations in the fight against three of the world's deadliest diseases. "We imagined the bulk of the money ending up in places like Lesotho, Haiti and Uganda, where these three diseases have reached crisis levels," said Jack Chow, the lead US negotiator in the founding of the fund, to Foreign Policy magazine.

Instead, he said, China had systematically exploited the set-up of the fund in order to win more aid grants than 29 African countries. "China has aggressively pursued Global Fund grants and has continued to win significant amounts with every passing year," he said, adding: "Any grants that China wins reduce the remaining money available for all eligible countries."

Despite recently becoming the world's second-largest economy, and announcing more than $125 billion in new health spending for the countryside last year, China still receives three times as much to fight AIDs and malaria than South Africa, one of the worst-afflicted countries.

"China has won malaria grant money totalling $149 million in a country where only 38 deaths from the illness were reported last year," said Mr Chow. "That is more money than the Democratic Republic of Congo, which reported nearly 25,000 malaria deaths in the same period."

Mr Chow said China had only paid $16 million into the fund, compared to the $6.5 billion pledged by the United States and the $2.2 billion from the UK. That gave China a 60-fold payout on its contribution.

"The $1 billion awarded to China could have been used by the poorest countries to distribute 67 million anti-malarial bed nets, 4.5 million curative tuberculosis treatments or nearly two million course of anti-retroviral therapy for AIDS patients - equivalent to all those living with the disease in Kenya," said Mr Chow.

China, like India, has been eligible for the money because its enormous population means that its per-capita income, the key criteria in assessing grants, remains very low. It competes in the same bracket as Bolivia and Cameroon.

"How did China ever become eligible for grants in the first place? In short, because of a loophole," said Mr Chow, who added that other countries were afraid of the repercussions if they sought to oppose China's exploitation of the system. "It would risk incurring Beijing's diplomatic wrath," he said.

However, he said if no changes were made, the situation could endanger the fund's survival as it presses ahead to win $20 billion of new funding for 2011-2013.

At the end of the International Aids Conference in Vienna in July, Oxfam said there was little hope of raising the cash in the current climate.

Meanwhile, the Global Fund said it had approached China with a request for more help. "The Chinese told me they would think about it," said Michel Kazatchkine, the executive director of the fund.

In response to the criticism, Chinese state media argued that the country was seeing a "dramatic rise" in the number of malaria cases in the first half of the year, and said the country was doing its best to eliminate the disease by 2020.