UK seeks to counter Chinese influence with new branch of development investment – .

UK seeks to counter Chinese influence with new branch of development investment – .

The UK will overhaul its development investment arm with the aim of counterbalancing China’s influence in emerging countries by offering “alternatives” to taking on “debt with conditions”.

Liz Truss, British Foreign Secretary, will launch on Thursday British International Investment (BII), an organization that will mobilize private capital to invest in countries in Asia, Africa and the Caribbean, offering an alternative to Chinese loans, which are seen by some in the West as a tool to expand Beijing’s influence.

The BII is a revamped version of the government’s Commonwealth Development Corporation Group, which has historically been criticized for investing in purely commercial projects, such as hotels and shopping malls, and for focusing on more advanced economies.

Under plans for the BII, which will be launched on the London Stock Exchange, the UK will mobilize at least £ 9bn in investment per year by 2025. Officials have said this will include a partnership with capital markets and sovereign wealth funds to increase funding and help the private sector take hold.

Truss told the Financial Times in an interview that the new body would prioritize investments in infrastructure, providing low- and middle-income countries with “alternatives” to taking on “autocratic debt” and debt. non-market savings.

She noted that using the economy as a foreign policy tool to exert greater global influence was a “central part of Britain’s global agenda”.

Truss added: “We want to build a network of freedom across the world with our friends and partners. This implies closer economic partnerships. It is a positive program. It is not a conflicting program. It is about giving countries alternatives.

Joe Biden, US President, called for a plan to “rebuild a better world” that will provide poorer countries with a new source of infrastructure finance, offering a “democratic” alternative to Chinese loans.

In June, leaders of the G7 summit in Cornwall backed a Western rival to China’s Belt and Road Initiative – Beijing’s pledge to spend around $ 1 billion on infrastructure construction in the countries. developing – with a plan to deploy billions of dollars to help the poorest countries tackle climate change.

“The whole ‘rebuilding a better world’, which consists of a number of different countries working together to create reliable and honest investments in the world, is to attract more countries or more investments into the circle of influence. positive, ”Truss said.

The UK development finance institution CDC received £ 650million from the UK government in 2020 as part of a phased shift from UK development funds to so-called impact investments, which are also bringing a return commercial. Over the past 10 years it has received around 3% of the UK’s overseas development budget.

Officials said the exact amount of funding the new BII would receive would depend on a “range of factors” and would be agreed upon by the government in the new year.

“More money for developing countries, especially focused on infrastructure and green investments, is a good thing,” said Ranil Dissanayake, policy researcher at think-tank Center for Global Development.

“But the inference that this will allow countries to replace Chinese debt is rhetoric – £ 9 billion a year is peanuts compared to the size of China’s Belt and Road Initiative.”

“The most valuable part of this idea is the concept of the UK acting as a catalyst to encourage private sector investment and lower the cost of new technologies. It is because of this that British innovation could indeed compete with China’s brute force financing methods.

A Chinese hawk, Truss has previously spoken out against “economic coercion,” particularly in relation to some of Beijing’s controversial business practices. The BII would operate under a defined set of clear standards, Truss said. “Standards on transparency, standards on property rights and standards on the protection of individual freedoms.

“It will help these countries get the infrastructure and other finance they need to grow in a way that doesn’t have the terms or opacity of other funding offers. ”


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