Although there has been recent discussion about the possibility that the BRI is slowing down, strategic competition between larger powers over investment and loans in the Global South certainly is not. The US International Development Finance Corporation (DFC) struck a deal with the Ecuadorian government that is meant to help Ecuador repay its Chinese loans. In return for the financial assistance, Ecuador will exclude Chinese companies from its telecom networks. The chief executive of the US DFC called this deal “a novel model” that other countries can follow [US development bank strikes deal to help Ecuador pay China loans]. The deal is an interesting development in the US campaign to dissuade countries from using technology from Chinese companies (particularly Huawei and ZTE) in their telecom networks. The Trump administration lobbied in many countries to convince leaders not to use Chinese technology, but this seems to be the first case where this decision was bought in a deal that also aims to make a country less dependent on Chinese loans.
Competition between China and the US for influence through investment is not only taking place in South America. In Southeast Asia, several cases of competition received publicity as well. The Chinese Embassy in Manila, the Philippines, announced they had signed a contract for the highest funded China-Philippines project so far. The project consists of constructing a freight railway between two former US military bases (now freeport zones) in the Philippines, and will cost 940 million USD [China to fund $940m Philippine railway linking former US bases]. Vietnam is choosing to use US supported power plants rather than engaging the BRI in order to combat its energy shortage. Le Hong Hiep writes that many countries in Southeast Asia chose to take part in the BRI because it was the only viable option around, and that the US backed energy projects in Vietnam can be the start of a US alternative to the BRI [Sino-US Competition in Infrastructure Development: Power Plants in Vietnam].
Not only the US is competing with China for influence abroad. The Japanese foreign minister Motegi Toshimitsu visited Senegal, Nigeria and Kenya last week after visiting five countries in Latin America. Motegi’s visits are partially in response to Chinese foreign minister Wang Yi’s visits to Nigeria, DR Congo, Tanzania, Botswana and the Seychelles that ended last Friday. Motegi commented on China’s economic inroads in Africa and expressed his goal to improve Japan’s economic connections with the region in order to reverse some of China’s increasing sway [Japan and China woo Africa in dueling diplomatic blitz].
To some recipient countries of loans and investments, increased competition between lenders can turn out beneficial – more funding options and possibly higher amounts of funding – but increased competition between larger powers to invest in strategic places and sectors can also lead to others being neglected or losing out on financial means.
Vera Kranenburg
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