The Trump administration is rolling out a plan to offer the countries of Asia another option besides accepting investment from China’s massive One Belt, One Road initiative. The nascent American plan is still tiny compared with what Beijing has to offer, but it could mark the beginning of an economic strategy to counter Beijing’s growing regional economic influence.
On Monday at the U.S. Chamber of Commerce, Secretary of State Mike Pompeo led a team of Cabinet-level officials to unveil the economic piece of the administration’s Indo-Pacific strategy. While he didn’t actually call out China by name, the entire scheme is meant to show the countries of East and Southeast Asia they have an alternative to what many see as China’s predatory debt approach to energy, infrastructure and digital economy investment, which is already resulting in backlash in countries including Malaysia, Sri Lanka and Pakistan.
Critics may call the plan a drop in the bucket compared with the multitrillion Chinese investment program, but it’s just a start. The Trump administration is betting that Asian countries are thirsting for ways to develop their economies without Chinese strings attached.
“I am here to say emphatically that the Trump administration is expanding our economic engagement in the Indo-Pacific,” Pompeo said in his speech. His basic pitch is that American private investment is more reliable, more trustworthy and can reinforce the rules-based order in Asia that Beijing is seeking to supplant.
“Thanks to [our] history of economic and commercial engagement, America’s relationships throughout the Indo-Pacific today are characterized by mutual trust and respect,” Pompeo said. “American friendship is welcomed, and American businesses are recognized for their ingenuity, reliability and honesty.”
Commerce Secretary Wilbur Ross, Energy Secretary Rick Perry and other top administration officials will participate in this week’s business forum at the chamber with industry leaders. Pompeo will travel to Singapore and Indonesia in part to showcase the new initiative.
The administration is unveiling a suite programs by the State Department and U.S. Agency for International Development meant to encourage public-private partnerships to help countries develop digital infrastructure, regulatory policies and cybersecurity. A new interagency body led by the National Economic Council will coordinate the new effort to find projects, financing and legal support for partner countries, officials said.
Right now, the administration is dedicating about $115 million to the effort, with an eye toward getting more money in the next round of budget deliberations. Administration officials also said they will push Congress to pass the Build Act, which would establish a new development finance corporation to help private industry fund infrastructure in developing countries.
And while Pompeo won’t say this out loud, the administration believes that countries are increasingly put off by the Chinese approach. His predecessor Rex Tillerson laid out that argument in a speech last October at the Center for Strategic and International Studies.
‘We have watched the activities and actions of others in the region, in particular China, and the financing mechanisms it brings to many of these countries which result in saddling them with enormous levels of debt,” Tillerson said.
Chinese projects don’t create local jobs because they rely on foreign workers and their financing is structured in a way that often ends in default with China taking over the very projects it was meant only to be supporting, Tillerson said. He called for the United States to develop the very kind of alternative financing mechanisms Pompeo announced Monday. But even Tillerson acknowledged that Beijing’s program has its advantages.
“We will not be able to compete with the kind of terms that China offers, and – but countries have to decide: What are they willing to pay to secure their sovereignty and their future control of their economies?” Tillerson said.
Of course, any Asia economic strategy is incomplete without a robust trade component and the Trump administration withdrew from negotiations over the 12-nation Trans-Pacific Partnership. President Trump has said he wants to strike bilateral trade deals with countries in Asia, but there’s no real progress to report.
But if Monday’s rollout does lead to a sustained and well-funded effort to build a real U.S. economic leg to the administration’s Indo-Pacific strategy, then it’s a good step in the right direction. The Obama administration announced a “pivot” to Asia but never really implemented it, on either the military side or the economic side.
The Trump administration now needs to put its money where its mouth is. Countries in Asia can’t be expected to reject gobs of Chinese government funding, even if the terms are bad. But they should at least be given the option to do business with the United States, which would be much healthier for their economies and ours.