By Keith Johnson
From the article:
In a stark reversal, the “America First” administration of U.S. President Donald Trump has ramped up Washington’s ability to compete with China in financing development around the world, pushing back against what administration officials have called Beijing’s “debt trap diplomacy.”
Trump over the weekend signed legislation that will modernize and expand U.S. development finance, essentially doubling its financial firepower and creating a new agency with a host of authorities. The new entity, which will merge the existing Overseas Private Investment Corporation (OPIC) and the Development Credit Authority, will make it easier for the U.S. government to encourage private sector investment in countries where Chinese largesse has for years been used to win influence.
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Chinese President Xi Jinping’s signature foreign-policy initiative is the trillion-dollar Belt and Road Initiative that envisions building infrastructure across South and Central Asia, Africa, and Europe. China has also launched a pair of new development banks to compete with Western-dominated development banks, such as the World Bank. And Beijing’s state-owned China Development Bank also wields more than $1 trillion in assets to underwrite development around the world.
“This really is viewed as the primary response to Chinese finance around the world,” said Scott Morris, a senior fellow at the Center for Global Development. Rather than just criticize China’s use of development finance, the Trump administration decided to support the legislation that gives countries an alternative to seeking funding from China, he said.
Read the full article here.