Daily Management Review

US President Biden Backs Developing Markets While Xi Shuns The G20


President of the United States Joe Biden brings an offer to the "Global South" to this weekend's Group of 20 (G20) conference in India: no matter what happens to China's economy, the United States can assist support your development.
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 funnelled billions of dollars to developing countries but left many of them deeply in debt. Biden will be armed with money for the World Bank and pledges of sustained U.S. engagement.
At least one thing will work in his favour: Chinese President Xi Jinping won't be present at the discussions.
Although Biden expressed his disappointment, the absence of Xi as China's economy falters provides Washington with a small window of opportunity to shift the agenda of a political club it has tried to control.
In order to free up hundreds of billions of dollars in additional funds for grants and loans, Biden's plan for World Bank reform and increased funding for the lender's infrastructure and climate help in developing countries are at the centre of his argument.
In addition to past efforts by the United States and its close allies to generate $600 billion by 2027 in public and private funding for the Partnership for Global Infrastructure and Investment, an alternative to the Belt and Road that does not include China, the White House is asking Congress for $3.3 billion.
"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."
Premier Li Qiang will represent China at the G20 as its authorities deal with slowing GDP and a potential catastrophe over real estate debt. Vladimir Putin, the president of Russia, will also not attend and will instead send Sergei Lavrov, his foreign minister.
In contrast to the 1.0% they predicted for the United States and 3.0% internationally, the IMF predicts that the Middle East, Central Asia, developing countries in Asia, and sub-Saharan Africa will all experience GDP growth of between 3.2% and 5.0% in 2019.
But as climate change puts a strain on ageing, frequently colonial-era infrastructure, those nations confront significant obstacles to realising their full potential.Concerns of difficulties resembling the Asian financial crisis, which led to the founding of the G20 in 1999, have arisen as a result of the COVID-19 pandemic, greater inflation, and rising U.S. interest rates, which have combined to make those countries' debt burdens increasingly unsustainable.
The ten-year-old Belt and Road programme of Xi has contributed. As part of the project, which called for Chinese institutions to finance the majority of the infrastructure in primarily underdeveloped countries, China has loaned hundreds of billions of dollars.
But as interest rates have risen, lending has dried up in recent years, and many nations are finding it difficult to make their debt payments.
Washington believes that a revitalised World Bank might address the needs of the Global South and advance 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.
Before Biden's visit, Sullivan told reporters in a briefing that "World Bank reform is not about China, in no small part because China is a shareholder in the World Bank."
However, when the White House requested funding from Congress for the initiative last month, it stated 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."
As the Democrat's anticipated Republican opponent in the 2024 presidential election, Biden has built his foreign policy around opposing Russia's war in Ukraine, controlling rivalry with China, and repairing U.S. friendships that were abandoned by his predecessor, Donald Trump.
While those initiatives have been successful with long-standing U.S. allies, they have not been as well received by developing nations like Brazil, India, and South Africa, which have sought greater Western investment while attempting to avoid being caught in the crossfire of Washington's disputes with Beijing and Moscow.
"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.
In May, Xi hosted a meeting of Central Asian leaders to discuss development as part of his ongoing efforts to engage the developing countries. At the BRICS summit in South Africa last month, he declared that the Chinese economy has "great vitality."
This newer than the G20 BRICS club, which also includes China, South Africa, and Brazil, excludes the United States and soon aims to add Saudi Arabia, Iran, Ethiopia, Egypt, Argentina, and the United Arab Emirates to its membership.
In November, Xi is anticipated to visit the APEC conference in San Francisco, where he might cross paths with Biden.