China’s ambitious overseas infrastructure investment program is a form of economic and geopolitical imperialism, according to Senior Member of President Trump’s Administration.
“The Chinese pitch is orientation toward China,” said Adam Boehler, the first CEO of the U.S. International Development Finance Corporation. (Formed in December 2019).
“It is about advancing China’s control and interest,” he said in an interview. “I’d liken it more toward colonialism, back in the 1800s, which doesn’t work out that well, because sovereign nations like to run themselves.”
That observation is a window into the message carried by Boehler, whose newly created agency is “America’s development bank,” as he seeks investment opportunities in developing countries.
The critique appropriates a favourite Chinese communist talking point, Beijing often invokes the history of Western imperialism to burnish the regime’s reputation overseas while identifying a through-line between President Trump’s nationalist agenda, the global U.S. competition with China, and the interests of the local countries around the world.
“Our pitch is we want to come and invest, and we want to improve development in your country,” Boehler said. “But it’s not about the United States having undue influence over your country. It’s about moving toward free and transparent markets.”
Boehler is tasked with blunting the appeal of China’s vaunted Belt & Road Initiative the $1 trillion spending program that Secretary of State Mike Pompeo has denounced as a “treasury-run empire build.”
The financial program enabled Xi Jinping, the General Secretary of the Chinese Communist Party, to gain sovereignty over a New Port in Sri Lanka in 2017. U.S. officials believe the deal exemplifies China’s engagement in “predatory” lending to corrupt or impoverished countries in order to gain strategic advantages when the government struggles to repay the debt.
Where was the Alternative?
“I’ve met a whole bunch of, probably now going on 20 or so Heads of State in the Countries we focus on, and the typical response you get, almost universally, is ‘We didn’t want to take money from China or that other autocratic country, but where was the United States?
Where was the alternative?’” Boehler said. “The International Development Finance Corporation is that alternative.”
Congress created the independent agency through the Build Act, a 2018 law that merged the now-defunct Overseas Private Investment Corporation with a credit-providing arm of the U.S. Agency for International Development.
Lawmakers empowered Boehler to risk $60 billion total in overseas investment operations, a small sum compared to the resources marshaled by Chinese plans but one that Boehler thinks is sufficient to provide seed money for U.S. and Western companies to get involved.
“We’re a minority investor, and so, we catalyse generally four to five times the amount,” he said of the DFC, which launched in December 2019.
Such conversations can double as high-stakes negotiations, with not only money but national security interests on the line. China uses that “debt-trap diplomacy,” as U.S. officials call it, not only to gain an advantage over their business partners but to get the real estate needed to wage an economic or even military competition with the U.S. at points ranging from the Pacific Islands to the Arctic.
Boehler consults with State Department and Pentagon officials in part to learn about places or projects that warrant additional attention from his team due to their national security significance and the potential value of preempting China’s influence operations.
“They will identify, whether it is at a region level, a country level, a project level sometimes what are really important to us from a foreign policy perspective and why, and then, our job then is to help execute on that,” he said.
The DFC board approved more than $1 billion worth of investments during their quarterly meeting in early June, featuring at least 26 projects across Latin America, Africa, and Asia. Nine of the projects highlighted by the announcement are in India, a major economic power that could play a vital role in western plans to stymie China’s aggression in the region.
“I really think an important part of our Foreign Policy is orienting toward free, open transparent markets, which is not all about the United States that actually benefits the host country,” Boehler said.
“It’s our job to then, when we’re dealing with allies or with others, to articulate the difference between our money and Belt & Road Money, and there is a big difference between the two.”
The deepening rivalry between the U.S. and the world’s most powerful communist government means that even relatively minor business investments can have out sized national security significance.
“In my opinion, our single most important foreign policy goal is free, open, transparent markets,” Boehler said. “Because if you have free open, transparent, competitive markets, they tend to instil the values in a Country that we hold so dear.”