Biden bets on emerging markets as Xi snubs G20

WASHINGTON, Sept 7 (Reuters) – US President Joe Biden arrives at this weekend’s Group of 20 (G20) meeting in India with an offer to the “Global South”: whatever happens to the China’s economy, the United States can help finance its development.

Armed with cash for the World Bank and promises of sustained US 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 it left many deeply in debt.

He will have at least one advantage: Chinese President Xi Jinping will not be at the meetings.

while biden He said he was “disappointed”Xi’s absence as the Chinese economy falters it creates a slim window of opportunity for Washington to reform the agenda of a political club it has fought to corner.

At the center of Biden’s speech are the proposals for reform of the World Bank and intensified 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 previous moves by the United States and its close allies to raise $600 billion by 2027 in public and private money for the Global Infrastructure and Investment Partnership, an alternative the Belt and Road that excludes China.

“Xi’s absence from the G20 gives the United States an opportunity, which could be compounded by the challenges China’s economic slowdown will have for Belt and Road spending,” said Zack Cooper, Asia-focused senior fellow 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 grapple with weak growth and a potential real estate debt crisis. Russian President Vladimir Putin the event is also being skippedsending Foreign Minister Sergei Lavrov.

The IMF forecasts that the Middle East, Central Asia, developing Asia, and sub-Saharan Africa will achieve GDP growth of between 3.2% and 5.0% next year, faster than the 1.0% they projected for United States and 3.0% worldwide.

But those countries face serious challenges in reaching their potential as climate change strains aging infrastructure, often from the colonial era.

The COVID-19 pandemic, higher inflation and rising interest rates in the United States have conspired to make those countries’ debt burdens increasingly unsustainable, prompting fears of problems similar to the Asian financial crisis that promoted the creation of the G20 in 1999.

Xi’s decade-long Belt and Road initiative has played a role. China has lent hundreds of billions of dollars as part of the project, which called for Chinese institutions to finance most of the infrastructure in mainly developing countries.

However, credit has dried up in recent years and many countries are struggling to pay off their debts as interest rates rise.

Washington believes that a rebooted World Bank could meet the needs of the Global South and serve its own interests.

“Even the last administration — the most skeptical of all this — made investments in foreign aid because those investments are in America’s own interest, as well as being the right thing to do,” said Jake Sullivan, Biden’s chairman. national security adviser, referring to the administration of former President Donald Trump.

Sullivan, in a briefing for journalists ahead of Biden’s trip, argued that “World Bank reform is not about China, largely because China is a World Bank shareholder.”

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 coercive and unsustainable loans and infrastructure projects of the People’s Republic of China for developing countries around the world.”

‘TAKING SIDES’

Biden has based his foreign policy on dealing with Russia’s war in Ukraine, managing competition with China and restoring American alliances neglected by his predecessor Trump, the Democrat’s likely Republican opponent in the 2024 presidential election.

Those efforts have been successful with America’s traditional partners but have resonated less with developing countries, including Brazil, India and South Africa, which have tried to avoid being affected by Washington’s conflicts with Beijing and Moscow even as they seek a major western investment.

“We must be able to maneuver without taking sides, as we have done with the Ukraine war,” said Khulu Mbatha, a former foreign policy adviser to South African President Cyril Ramaphosa.

For his part, Xi is also finding new ways to engage with the developing world, hosting a meeting of Central Asian leaders and discuss the development in May. Last month, he told the BRICS summit in South Africa that the Chinese economy has “great vitality.”

That the BRICS group, which includes Brazil, Russia and India along with China and South Africa, is newer than the G20, excludes Washington and soon plans additions to its staff: Saudi Arabia, Iran, Ethiopia, Egypt, Argentina and the United Arab Emirates.

Xi is also expected to attend an Asia-Pacific Economic Cooperation meeting. (APEC) summit in San Francisco in November, where he could meet with Biden.

Our standards: The Thomson Reuters Trust Principles.