Britain advised to push on with China aid

The Department for International Development (DFID) has said it will stop aid to China in 2011, now that years of rapid economic growth have turned China into a middle-income country.

China has the world's third-biggest economy and London is looking to Beijing to use some of its nearly $2 trillion (1.4 trillion pounds) in foreign exchange reserves to help ease the global financial and economic crisis.

Yet the British parliament's International Development Committee said DFID's work in China was not complete.

It said around 16 percent of China's people -- equivalent to nearly one-third of the population of sub-Saharan Africa -- still live in poverty.

Just under half China's population had no access to basic sanitation and a quarter lacked clean drinking water, it said.

The global financial crisis and the May 2008 earthquake, which killed more than 80,000 people in Sichuan province, had pushed people back into poverty, the committee said.

Withdrawing from China just four years before the deadline set for the U.N. Millennium Development Goals -- targets for improving health and education and halving global poverty by 2015 -- could contribute to several of the targets being missed, the committee said.

"We recognise that the UK's aid relationship with China should end. Nevertheless, we strongly believe that DFID's development partnership with China should continue," it said in a report.

This would mean keeping DFID staff in Beijing and funding of 5-10 million pounds a year between 2012 and 2015 to finance pilot projects, it said.

DFID plans to spend 30 million pounds on its China development aid programme in the 2009/10 financial year, falling to 20 million pounds in 2010/11, the committee said.

The opposition Conservatives disagreed with the committee's call. "China spent 20 billion pounds hosting the Olympics, has an ambitious space exploration programme, and is sitting on foreign exchange reserves of almost $2 trillion," the party's development spokesman, Andrew Mitchell, said in a statement.

"British taxpayers need to know that their aid money is helping the poorest people in the world, not going to countries which have enough money to tackle poverty themselves."

A spokesman for DFID said: "Although our funding is planned to end in 2011, we will continue to work closely with China to make sure they have the tools and expertise they need to tackle poverty across the country as well as meeting new challenges, such as climate change."

(Reporting by Adrian Croft; Editing by Alison Williams)