Trump strikes a blow in US-China struggle with Build Act to contain Xi’s Belt and Road
- The just-passed US Build Act will create a new agency to lend to developing countries, particularly in Asia and Africa
- The legislation elevates the US into a potent player in global development financing, five years after Xi Jinping launched his signature initiative
That rare spirit of bipartisanship was clearly evident this month with the passing of the Better Utilisation of Investment Leading to Development (Build) Act by supermajority votes in both chambers of the American legislature.
Signed into law by Trump on October 5, the act – latched onto must-pass legislation reauthorising the Federal Aviation Administration – will create a new agency that, just like the belt and road plan, will make available loans and guarantees to developing countries, particularly in Asia and Africa.
While the soon-to-be-formed US International Development Finance Corp (IDFC) will have an exposure cap of US$60 billion – a drop in the ocean compared with Chinese-backed development financing – the American effort is viewed by some quarters as having an edge because it could prove a catalyst for attractive private sector financing.
Regional observers say the ratification of the Build Act could well be of greater significance as the rivalry between the world’s two biggest economies heats up.