U.S. Ends Contracts to Foreign-Owned Firms; Chinese Got 9 Worth $320 Million for African Projects

Article excerpt

Byline: Seth McLaughlin, THE WASHINGTON TIMES

Stung by criticism that American taxpayers are footing the bill for China-owned companies to expand their influence overseas, a government development agency has said it will no longer award contracts to businesses owned by foreign governments.

The change comes after Sen. Jim Webb, Virginia Democrat, discovered that the Millennium Challenge Corp., a U.S. government agency that hands out large-scale grants to reduce poverty and stimulate economic growth in developing countries, had awarded nine contracts to Chinese firms worth $320 million for projects in Africa.

At least five of those contracts went to Chinese state-owned companies, with construction giant SinoHydro receiving $231 million to build roads and an airport in Tanzania, and China Railways Wuju Corporation receiving $42 million to construct a highway in Ghana.

Patrick C. Fine, MCC's Vice President of Compact Development and Implementation, told The Washington Times on Wednesday that the change makes government-owned enterprises ineligible to compete for MCC-finance contracts.

The purpose of that is to ensure a fair playing field for any private sector companies that are competing for any MCC-financed contracts, Mr. Fine said.

The move comes as Congress shows signs of growing increasingly concerned with China's increasing economic and political strength. It also comes after the Obama administration signaled plans to take a tougher stance with China on trade issues and pushed Beijing to reform its currency system.

The brainchild of President George W. Bush, the MCC was designed to help combat global poverty. Mr. Bush linked foreign aid to the threat of terrorism posed by failed states. The MCC was launched in 2004 with bipartisan support from Congress.

Mr. Bush originally hoped that Congress eventually would provide the MCC with $5 billion a year, but his highest single-year funding request was for $3 billion. For fiscal 2010, Congress appropriated $1. …