The United States’ focus on outcompeting China is evident in its recent budget request for the 2025 fiscal year, as highlighted by Deputy Secretary of State for Management and Resources Rich Verma. With a proposed $4 billion over five years in mandatory funding, the administration aims to leverage various tools to counter China’s influence.
A significant portion of this funding, $2 billion, is designated for establishing a new international infrastructure fund. This fund aims to provide an alternative to Chinese infrastructure financing, which has been a cornerstone of China’s Belt and Road Initiative. By offering a credible and reliable option, the United States hopes to sway developing countries away from Chinese investment and influence.
Additionally, the proposed budget allocates another $2 billion for “game-changing investments” in the Indo-Pacific region. These investments are aimed at assisting countries in pushing back against what the U.S. perceives as China’s “predatory efforts.” Such initiatives may include endeavors to enhance governance, strengthen the rule of law, and promote sustainable development in the region.
Furthermore, the State Department seeks an additional $4 billion in discretionary funding to support foreign assistance and diplomatic engagement in the Indo-Pacific. This underscores the comprehensive approach the United States is taking to counter China’s growing influence in the region.
China’s Belt and Road Initiative has significantly surpassed U.S. efforts in funding infrastructure projects in developing countries over the past decade. The proposed budget reflects the U.S. government’s acknowledgment of this gap and its determination to address it strategically.
The report by U.S. researchers underscores the significant financial support provided by Chinese institutions to developing countries over the past two decades, amounting to $1.34 trillion. In response, Rich Verma, Deputy Secretary of State for Management and Resources, emphasized the importance of leveraging all available tools to effectively compete with China, particularly in the realm of infrastructure investment.
Verma’s statement reflects the broader strategy of the Biden administration to counter China’s influence by bolstering investments in critical areas, both domestically and internationally. The proposed budget for fiscal year 2025 includes provisions to continue investing in domestic strengths, collaborating with like-minded partners, and addressing challenges posed by China.
The establishment of an infrastructure fund aims to support transformative, high-quality, and sustainable infrastructure projects, aligning with efforts such as the Partnership for Global Infrastructure and Investment (PGI) initiated during the 2023 G20 Summit in India. This partnership, co-hosted by President Biden and Prime Minister Modi, seeks to accelerate investments in infrastructure development and economic corridors.
Furthermore, the Western response to China’s Belt and Road Initiative includes pledges from G7 leaders to raise $600 billion over five years to finance infrastructure projects in developing countries. This initiative aims to offer alternatives to Chinese-led projects and mitigate concerns about debt burdens incurred by recipient countries.
While Chinese overseas finance has garnered support in many developing nations, it has also faced criticism, particularly regarding debt sustainability and transparency in project financing. Instances such as those in Sri Lanka and Zambia, where infrastructure projects funded by China have resulted in significant debt burdens, underscore the complexities and challenges associated with competing in the global infrastructure landscape.