global trade

Departing EXIM chief urges Biden team to counter Chinese lending dominance

Reuters
Departing EXIM chief urges Biden team to counter Chinese lending dominance

EXIM. The Export-Import Bank of the United States.

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EXIM head Kimberly Reed is confident that US President-elect Joe Biden understands the challenges posed by China, which often offers aggressive financing terms to clinch big business deals

The head of the Export-Import Bank of the United States (EXIM) on Monday, January 18, urged the Biden administration to keep pushing to neutralize Chinese export subsidies and help US companies compete, building on gains made under Donald Trump.

Chairperson Kimberly Reed, a political appointee who will leave her job on Wednesday, January 20, after 20 months in office, told Reuters she was confident that restoration of the bank’s full lending powers had strengthened the competitiveness of US companies and helped level the playing field, but more work was needed.

Republicans in Congress tried to shutter the institution in 2015, arguing that it was “corporate welfare” for big exporters such as Boeing, General Electric, and Caterpillar.

They kept EXIM from financing major projects such as power plants and commercial aircraft for 4 years by blocking board nominations until Trump reversed his previous opposition to the Bank and supported it, working with Democrats in Congress.

At the end of 2019, EXIM had secured a 7-year reauthorization, the longest in its 87-year history, as part of a spending bill that won strong bipartisan support.

Reed leaves the bank with a pipeline of some $39 billion in projects that will support some 147,000 jobs, and expressed confidence that President-elect Joe Biden understood the challenges posed by China, which often offers aggressive financing terms to clinch big business deals.

The Trump administration focused heavily on pushing back against Chinese gains in technology and trade, using EXIM financing as a way to make inroads in countries that had become heavily reliant on trade with China.

“Our approach to the People’s Republic of China throughout this administration has been very strong and very significant,” Reed said. “Our country is in a much stronger position now, and I hope that President-elect Biden will continue this effort.”

Reed said US companies faced increasingly intense competition – with 116 countries now having their own export credit agencies, up from 85 in 2016 – but global buyers had told her they were pleased to see EXIM was again backing deals.

The new congressionally mandated China program calls for EXIM to dedicate 20% of its total financing authority, or $27 billion, to provide loans, guarantees, and insurance at rates and terms that are competitive with those offered by Beijing.

Key sectors targeted for this financing include artificial intelligence, biotechnology, wireless communications equipment, including 5G, quantum computing, water treatment, and renewable energy, as well as emerging financial technologies, she said.

In the fiscal year ended September 30, EXIM authorized a total of $5.4 billion to support more than $10.8 billion of US exports and some 37,000 US jobs, according to the bank’s annual report, which is to be released Tuesday, January 19.

EXIM’s approval in 2019 of one of the biggest deals in its history – $4.7 billion in assistance for a liquefied natural gas project in Mozambique – had also displaced China and Russia, which had been poised to finance the deal, Reed said.

EXIM also focused on boosting exports of US goods and services to sub-Saharan Africa, particularly in the information and communications technology, health care, and agriculture sectors, the EXIM report said.

Big projects included $91.5 million in loan guarantees to support the export of design engineering and construction services to Senegal, a deal that will help bring electricity to some 330,000 people in more than 400 villages, Reed said. – Rappler.com

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