A freshman Republican member of the House of Representatives is pushing for the Biden administration to counter China’s use of export subsidies for overseas lending to developing nations.
(Bloomberg) — A freshman Republican member of the House of Representatives is pushing for the Biden administration to counter China’s use of export subsidies for overseas lending to developing nations.
Iowa’s Zach Nunn, who sits on the House Financial Services Committee, says China uses export subsidies to buy global influence by offering developing nations predatory credit lines to build infrastructure through its decade-old Belt and Road Initiative.
He says that such loans give China undue influence in other countries from Ecuador — where billions of dollars in Chinese lending was key to building a dam — to Pakistan and throughout Africa.
Nunn’s bill would require the US Treasury Department to create a strategy and timeline to get China to comply with Organization for Economic Co-operation and Development’s rules on export credits. The pact aims to create a level playing field and avoid a race to the bottom in export credits. China isn’t a member of the OECD, an institution that coordinates best practices among about three dozen mostly rich nations.
The bill also would require Treasury to negotiate a substantial reduction in China’s use of the subsidies over the next decade and submit an annual report to Congress.
“The goal here is to be able to move China in a direction that has transparency in its lending, particularly in the developing world,” Nunn said in an interview.
Republicans, who took over control of the House of Representatives after winning a majority in November’s mid-term elections, are ramping up pressure on the Biden administration to challenge China over what they say are unfair economic practices that threaten US global interests and national security. The Biden administration also has stepped up curbs on technology and is considering screening or limits on US investments in the nation.
Nunn said that based on his conversations with Democrats, he expects the bill to garner bipartisan support.
It’s unclear exactly how much money China has lent because details aren’t public. Research from Boston University’s Global Development Policy Center shows that China Development Bank and Export-Import Bank of China, the nation’s two biggest international development lenders, committed almost $500 billion in funding to 100 countries between 2008 and 2021.
The bill doesn’t contain instructions to the US Development Finance Corp. about how it should operate.
Nunn said “there is a fundamental difference between the legitimate support the United States provides to our partners and the predatory actions of the Chinese Communist Party being used to expand their influence across the globe. Anybody who suggests otherwise is drastically under estimating the global threat posed by China.”
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