Biden doubles down on emerging markets as Xi snubs G20
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[September 07, 2023] By
Trevor Hunnicutt and Nandita Bose
WASHINGTON (Reuters) - U.S. President Joe Biden arrives at this
weekend's Group of 20 (G20) meeting in India with an offer for the
"Global South": whatever happens to China's economy, the United States
can help fund your development.
Armed with cash for the World Bank and promises of sustained U.S.
engagement, Biden hopes to persuade fast-growing economies in Africa,
Latin America and Asia that there is an alternative to China's Belt and
Road project, which has funneled billions of dollars to developing
countries but left many deeply in debt.
He will have at least one advantage: Chinese President Xi Jinping will
not be at the meetings.
While Biden said he was "disappointed", Xi's absence as China's economy
wobbles creates a narrow opening for Washington to reshape the agenda of
a political club it has struggled to corral.
At the heart of Biden's pitch are World Bank reform proposals and
stepped-up funding for the lender's climate and infrastructure aid in
the developing world, which would free up hundreds of billions of
dollars in new funding for grants and loans.
The White House is seeking $3.3 billion from Congress to complement
earlier steps by the U.S. and close allies to raise $600 billion by 2027
in public and private money for the Partnership for Global
Infrastructure and Investment, a Belt and Road alternative that excludes
China.
"Xi's absence from the G20 does give the United States an opening, which
could be compounded by the challenges that China's economic downturn
will have for Belt and Road spending," said Zack Cooper, a senior fellow
focused on Asia at the American Enterprise Institute.
"But the question ... is whether the United States will be able to step
up."
FAST GROWTH, HIGH DEBT
Chinese Premier Li Qiang will represent China at the G20 as its leaders
cope with sagging growth and a possible property debt crisis. Russian
President Vladimir Putin is also skipping the event, sending Foreign
Minister Sergei Lavrov.
The IMF forecasts that the Middle East, Central Asia, developing
countries in Asia and sub-Saharan Africa will deliver between 3.2% and
5.0% GDP growth next year, faster than the 1.0% they projected for the
United States and 3.0% globally.
But those countries face serious challenges to reach their potential as
climate change tests aged, often colonial-era infrastructure.
The COVID-19 pandemic, higher inflation and rising U.S. interest rates
have conspired to make those countries' debt burdens increasingly
unsustainable, causing fears of problems similar to the Asian financial
crisis that prompted the creation of the G20 in 1999.
Xi's decade-old Belt and Road initiative has played a role. China has
lent hundreds of billions of dollars as part of the project, which
envisaged Chinese institutions financing the bulk of the infrastructure
in mainly developing nations.
[to top of second column] |
U.S. President Joe Biden delivers remarks on International Longshore
and Warehouse Union (ILWU) and Pacific Maritime Association (PMA)
finalizing a new contract from the State Dining Room at the White
House in Washington, U.S., September 6, 2023. REUTERS/Leah
Millis/File Photo
Yet the credit has dried up in recent years and many countries are
struggling to repay their debts as interest rates rise.
Washington thinks a rebooted World Bank could meet the Global
South's needs and serve its own interests.
"Even the last administration - the biggest skeptic of all of this -
made investments in foreign aid because those investments are in the
naked self-interest of the United States, as well as being the right
thing to do," said Jake Sullivan, Biden's national security adviser,
referring to former President Donald Trump's administration.
Sullivan, in a briefing for reporters before Biden's trip,
maintained that "World Bank reform is not about China, in no small
part because China is a shareholder in the World Bank."
But when the White House asked Congress for cash to fund the effort
last month, the White House said in a letter to lawmakers that it
was "essential that we offer a credible alternative to the People's
Republic of China's coercive and unsustainable lending and
infrastructure projects for developing countries around the world."
'TAKING SIDES'
Biden has premised his foreign policy on standing up to Russia's war
in Ukraine, managing competition with China and restoring U.S.
alliances neglected by his predecessor Trump, the Democrat's likely
Republican opponent in the 2024 presidential election.
Those efforts have found success with traditional U.S. partners but
has resonated less with developing countries, including Brazil,
India and South Africa, which have tried to avoid being whipsawed by
Washington's conflicts with Beijing and Moscow even as they seek
greater Western investment.
"We must be able to maneuver without taking sides, like we have done
with the Ukraine war," said Khulu Mbatha, a former foreign policy
advisor to South African President Cyril Ramaphosa.
For his part, Xi is also finding new ways to engage the developing
world, hosting a gathering of Central Asian leaders and discussing
development in May. Last month, he told the BRICS summit in South
Africa that the Chinese economy has "great vitality."
That BRICS group, which includes Brazil, Russia and India alongside
China and South Africa, is newer than G20, excludes Washington, and
soon plans additions to its roster - Saudi Arabia, Iran, Ethiopia,
Egypt, Argentina and the United Arab Emirates.
Xi is also expected to attend an Asia-Pacific Economic Cooperation
(APEC) summit in San Francisco in November, where he may meet with
Biden.
(Reporting by Trevor Hunnicutt, Nandita Bose and Michael Martina in
Washington, and Carien du Plessis in Johannesburg; Writing by Trevor
Hunnicutt; Editing by Don Durfee and Grant McCool)
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