A high-profile global fund for fighting diseases is freezing payments of grants to China worth hundreds of millions of dollars over suspected misuse of the money and the government's reluctance to involve community groups in the projects.
The decision by the Global Fund to Fight AIDS, Tuberculosis and Malaria is a rebuke to the authoritarian government at a time when it has intensified harassment of all types of activists to squelch any popular democratic uprising like the ones that shook Egypt and Tunisia.
The Geneva-based Global Fund first froze disbursements of a $283 million AIDS grant in November after finding that Chinese government agencies had breached an agreement by channeling too small a share of the funds to grass-roots groups.
Then earlier this month, the Global Fund stopped payments of all other grants in China after an internal report raised concerns about how the money was being used by the thousands of counties and districts that receive grant payments, Jon Liden, a spokesman for the fund, said Monday.
The suspension so far has blocked $23 million in funds, Liden said. But if the problem isn't resolved, it will halt the payment of $300 million in funding over the next several years for programs to prevent and treat HIV and AIDS in prostitutes, injecting drug users and other groups and for projects to eliminate malaria and treat multi-drug-resistant TB.
The fund has asked the government to respond to its concerns by an initial deadline of June 7, he said.
The Global Fund says local community groups play a critical role in disease-fighting efforts because of their ability to reach out to often marginalized groups and insists that they must be given a voice in decision making. That policy is running up against the Chinese government's deep-seated suspicion of any independent social organizations.
Liden said that while the government previously agreed to channel 35 percent of the AIDS grant to independent groups, only a much smaller portion was disbursed. Further, he said, a separate review found substandard financial reporting from local governments that received funds.
The fund's financial support is critical to China's national HIV strategy, which aims to provide treatment and care to the 740,000 people in China who are living with HIV. Liden said Chinese officials were willing to address the fund's concerns, with the Center for Disease Control and Prevention indicating in talks last week it would work to improve its management of the grants, repay any funds that were not properly used and increase funding and training for community groups.
"Overall we feel the Chinese government is taking these issues very seriously," Liden said. "They realize that this is something they need to get to grips with."
The Chinese Health Ministry did not respond to questions about the dispute. A statement released on its website Monday did not mention the fracas but said Health Minister Chen Zhu told the fund's deputy executive director, Debrework Zewdie, last Friday that both sides should strengthen cooperation.
Even so, the dispute comes amid larger debate among international aid donors and groups about whether China should continue to receive foreign aid, considering its relative prosperity borne by decades of high economic growth. Critics point to the government's ability to fund a manned space program or extravaganzas like the 2008 Beijing Olympics, while proponents say China still has hundreds of millions of poor and needs international know-how.
Critics have said that by competing with poorer developing countries for Global Fund grants, China is effectively robbing the poor. Since 2003, the Global Fund has disbursed $570 million in grants to China and has earmarked around $300 million for the next several years, according to Liden.
The current standoff, however, needs to be resolved because it hurts the independent groups and impedes the overall effort to fight these diseases, said the U.N. AIDS agency's country coordinator in China, Mark Stirling. Many of the groups, he said, depend on the funds to pay salaries and operate.
"The bottom line is we're worried about the suspension," Stirling said.