Hobbled US Import-Export bank is given new life to battle an aggressive China
- As concern over China’s state-subsidised financing grew, the US reopened its Export-Import Bank and created the US International Development Finance Corporation
- The bank, known as Exim, provides loans, guarantees and financing insurance ‘fully competitive with rates, terms and other conditions’ established by Beijing
The Export-Import Bank of the United States (Exim), Washington’s official export credit agency, sits just five minutes to the northeast of the White House. But it spent years in dormancy, and its return to prominence in late 2019 took an administration willing to use government resources to counter heavily subsidised Chinese competition.
After four years of inactivity, and as US concerns over China’s aggressive state-subsidised financing grew, Exim reopened its doors under the directive of former president Donald Trump. As central-government lending bolstered President Xi Jinping’s ambitious Belt and Road Initiative, China steadily gained influence in developing countries, raising Washington’s fears that Beijing was challenging America’s global dominance.
Under its China programme, which began a year ago, Exim provides loans, guarantees and financing insurance “that are fully competitive with rates, terms and other conditions established by the People’s Republic of China,” according to the description on its website. It is authorised to give preferences in 10 areas, including artificial intelligence, robotics, biotech, biomedical sciences and wireless communications equipment.
The approach, some policy watchers say, resembles that of China, which uses its state-backed economy to gain unfair advantages globally. To some degree, there is pressure on Washington to turn to China’s playbook, resorting to domestic policies that were once deemed less ideologically aligned with American values.
“The risk of China is that its success tempts us to screw up our own system, that because we haven‘t been able to beat them we’re going join them in [adopting] too much state intervention in the marketplace,” Daniel Rosen of the Rhodium Group said at a Centre for Strategic and International Studies event in January.
Exim’s revival is only one of the latest examples of how Washington has pulled out all the stops in countering Beijing. And the momentum isn’t likely to change as the Biden administration begins to review existing policies.