US President Donald Trump is now taking aim at the massive loans to Africa and other developing regions as part of President Xi Jinping’s Belt and Road Initiative to extend Chinese influence around the globe through the revival of the ancient Silk Road to Europe.
In a major policy speech coinciding with the start of last week’s IMF/World Bank Annual Meetings in Washington, US Commerce Secretary Wilbur Ross pulled no punches in attacking what the White House considers economically distorting and abusive lending by China to developing nations.
Ross, who has the last word in all US trade matters, cited the specific examples of Beijing foreclosing on the Chinese-built Port of Hambantota in Sri Lanka, and the takeovers of Democratic Republic of Congo cobalt mining and the oil and gas sector of Venezuela.
“Through the Belt and Road Initiative, China has invested in 117 nations, and those nations account for two-thirds of the world’s population,” Ross told the audience of the influential Federalist Society in Washington, adding: “Their state-owned enterprises use Chinese materials and Chinese nationals to build projects with very little local content, and if defaults occur, they foreclose on those assets rather than renegotiating the loans.”
As in Trump’s trade war with China, Ross’ attacks on BRI lending as the world’s finance ministers and central bank governors gathered in Washington clearly signaled the American administration’s determination to check China’s expansion in the economically and geopolitically strategic regions of Africa, Central Asia, the Balkans and Latin America.
Chinese lending, especially the issue of predatory terms, was a major point of discussion among African leaders at the International Monetary Fund as they found themselves the target of aggressive lobbying by US and Chinese officials.
Speaking to Capitol Intelligence during the IMF/World Bank meetings, Senegalese Finance Minister Abdoulaye Daouda Diallo said he was headed to a high-level meeting with US officials at the IMF to discuss the question of Chinese loans to the West African nation.
Kenyan Acting Treasury Secretary Ukur Yatani Kanacho told Capitol Intelligence that Chinese lending – especially vis-a-vis terms and conditions – was a critical issue that needed to be reviewed at a multilateral-level forum such as the IMF that brings together the world’s largest economies with emerging nations.
The issue of Chinese lending is a highly sensitive topic for finance ministers such as Kenya’s Ukur Yatani and Senegal’s Daouda Diallo as they must balance the need of any foreign capital against charges of selling out the national crown jewels to China.
The United States has already approved a gigantic expansion of the Overseas Private Investment Corporation (OPIC) into a new agency, the International Finance Development Corporation (IDFC), that can co-invest some US$60 billion with US and non-US private-sector companies in the same markets targeted by China’s BRI program.
Tangible evidence of Trump’s policy to contain Chinese expansion through US private-sector investment is the US-Uzbekistan Annual Business Forum chaired by Wilbur Ross and bringing together the Central Asian nations of Uzbekistan, Kazakhstan, Tajikistan, Kyrgyzstan and Turkmenistan with top Fortune 100 companies such as Honeywell, Boeing, Caterpillar, ExxonMobil, Case New Holland, John Deere, GE and Mars Inc.
The event this Tuesday in Washington is the first time that all Central Asian nations have come together for a US-sponsored investment forum.
In fact, the forum comes after Ross signed off on $6.5 billion of US private-sector investments with Uzbek President Shavkat Mirziyoyev and $7 billion with then-Kazakh president Nursultan Nazarbayev.
Wilbur Ross’ carrots even persuaded the reclusive Central Asian republic of Turkmenistan to send the country’s commerce minister to the forum.