MIAMI: This fall, Senate Majority Leader Chuck Schumer is slated to lead a bipartisan group of United States senators to China. The planned trip, like other recent visits to China by high-ranking US officials, is aimed at improving the relationship between the US and China.
Such efforts to ameliorate US-China diplomatic relations come amid growing tensions between the two economic giants. They also run parallel to US efforts to strengthen ties with Indo-Pacific countries to limit Beijing’s influence.
Take, for example, US President Joe Biden’s September trips to India for the G20 summit and to Vietnam, where US competition with China was a focus of Biden’s discussions. While he was in Asia, Biden made several agreements in science, technology and supply chain security designed to bolster US relations with India and Vietnam.
“I don’t want to contain China,” the president told reporters in Hanoi on Sep 10, shortly after meeting Vietnam’s communist party leader. US congressmen Mike Gallagher and Raja Krishnamoorthi echoed similar sentiments during an event held by the Council on Foreign Relations think tank in New York City the following day.
But even if the US’ stated goal isn’t to limit China’s global influence, its recent agreements with India, Vietnam and other countries may do exactly that.
WHAT US-LED G20 DEALS MEAN FOR CHINA
The US is actively looking for ways to blunt one of China’s best tools of influence: International loans.
During the New Delhi G20 summit in September, the US pledged to help reform the World Bank and International Monetary Fund to make them more flexible in lending to developing countries to finance renewable energy, climate mitigation and critical infrastructure projects. Biden committed the first US$25 billion to make those reforms possible and secured additional financial pledges from other countries totalling US$200 billion in new funding for developing countries over the next decade.
The US also signed onto a deal with the European Union, Saudi Arabia and India that will help connect the Middle East, Europe and Asia through rails and ports. Characterising it as a “real big deal”, Biden said the rail and ports agreement would help stabilise and integrate the Middle East.
These plans are aimed at providing an alternative to China’s Belt and Road Initiative. Commonly referred to as BRI, the initiative is China’s international infrastructure loan program. Over the past decade, Chinese government agencies, banks and businesses have loaned more than US$1 trillion abroad, and 60 per cent of the recipient countries are now in debt to these Chinese entities.
The US and other countries have long criticised BRI as “debt trap diplomacy”. One study suggests that the trillions of dollars in infrastructure loans to countries by the government and quasi-government bodies in China typically lead to debt problems that the borrowing countries can’t manage.
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As China grapples with a slowing domestic economy, it may become more difficult for Chinese entities to keep shelling out funding for big-ticket overseas projects. The new US-led agreements that come out of the G20 could fill the coming gap.
These G20 plans complement existing Western economic initiatives to compete with the BRI, including US trade pacts for the Indo-Pacific region and the Americas, the EU’s Global Gateway and the G7’s Partnership for Global Infrastructure and Investment.
HELPING INDIA COMPETE IN TECHNOLOGICAL ARENA
In their meeting on the sidelines of the G20, Biden and Indian Prime Minister Narendra Modi agreed to deepen collaboration on developing critical and emerging technology, such as quantum computing and space exploration, as well as 5G and 6G telecommunications. This will help India compete with China in the technological arena in the Indo-Pacific.
The telecommunications portion of a joint statement by Biden and Modi specifically mentions the US’ Rip and Replace program. It is about helping smaller telecommunications companies rip out technology from Chinese companies like Huawei or ZTE and replace them with network equipment from the West that will protect users’ data.
The US has banned Huawei and ZTE equipment from its telecommunication networks, deeming those companies national security risks. The US and India’s pledge to support Rip and Replace is a direct counter to China’s telecommunication technology expansion.