A map showing China in red, Members of the AIIB in orange, the six corridors in black Image Credit: Lommes /Wikimedia Commons
Amid growing Chinese influence in several developing regions, the United States has decided to create a new agency to offer countries financing options for major infrastructure and development projects.
In a report, The Wall Street Journal said that Congress was working to resolve the last barriers to passing a bill that would boost the U.S.’s role in international development in an attempt to “counter China’s growing influence” around the world.
The United States, which is already locked in a trade war with China, the second biggest economy, has been watching wearily as Beijing has expanded its sphere of influence with a massive One Belt One Road project.
Pakistan is one of the largest recipients of Chinese investment in the form of China Pakistan Economic Corridor with a cost of around $ 50 billion.
According to the Journal, the new US. body would combine several little-known government agencies into a new body, with authority to do $60 billion in development financing—more than double the cap of the current agency that performs that function.
“The measure, supported by the Trump administration, easily passed the House (of Representatives) this summer; it faces its biggest test in the Senate,” the report said.
“The bill’s momentum reflects growing bipartisan concern in Washington about the scale of China’s ambitions to restructure global trade routes so that all roads lead to Beijing,” it added. WSJ said US Senators have become especially concerned with China’s global investment plan known as the One Belt, One Road Initiative.
“People are waking up to what China is doing and see that we have to counter that,” Republican Congressman Ted Yoho, one of the House co-sponsors of the bill, which was introduced with bipartisan sponsorship in both chambers.
The move to legislate on the Capitol Hill represents a sharp reversal for the agency that currently promotes U.S. investment abroad, the Overseas Private Investment Corporation (OPIC). In President Donald Trump’s first budget in 2017, the agency was proposed for elimination—with the administration saying it provided “unnecessary federal interventions that distort the free market.”
As US. trade tensions rose with China, so did focus on the extent—and consequences—of China’s infrastructure spree, the report notes.
The main body of the new agency would be OPIC, founded by President Richard Nixon in 1971 to help American businesses invest in developing and emerging markets in order to further U.S. foreign-policy goals. The new agency would also take over several programs run by the U.S. Agency for International Development, the biggest of which is known as the Development Credit Authority.
The move in Washington is popular because OPIC’ has been profitable every year for the last 40 years and has contributed $8.5 billion to deficit reduction.
Currently, the agency has a portfolio of $23 billion, with its business consisting of loan guarantees, direct lending and political-risk insurance.
The OPIC has financed projects or insured including a toll road in Colombia, a geothermal power plant in Honduras, cellphone towers in Uganda and a nuclear-fuel storage facility in Ukraine.
