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Biden Bets on Emerging Markets as Xi Snubs G20

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In a rapidly changing global economic landscape, U.S. President Joe Biden has taken a bold step as he arrives at the Group of 20 (G20) meeting in India. His message to the “Global South” is clear: Regardless of China’s economic fortunes, the United States stands ready to support and fund their development initiatives. This article delves into Biden’s strategic move, exploring the implications and opportunities it presents.

The Absent Player: Xi Jinping

Biden’s offer gains significance from the absence of Chinese President Xi Jinping at the G20 meetings. While Biden expresses disappointment over this, Xi’s absence amid China’s economic uncertainties provides a unique opportunity for the United States to influence the G20’s agenda, a political club it has historically found challenging to navigate.

Reshaping the World Bank

At the core of Biden’s pitch are comprehensive World Bank reform proposals. These reforms include increased funding for the lender’s climate and infrastructure projects in the developing world. This could potentially unlock hundreds of billions of dollars in new funding for grants and loans, reshaping the economic landscape of the Global South.

The Alternative to Belt and Road

China’s Belt and Road project, which has infused substantial capital into developing nations, has also left many countries deeply in debt. The White House is seeking $3.3 billion from Congress to establish an alternative – the Partnership for Global Infrastructure and Investment, a Belt and Road alternative that excludes China. This alternative could prove to be a game-changer.

The United States’ Opening

“Xi’s absence from the G20 does give the United States an opening, which could be compounded by the challenges that China’s economic downturn will have for Belt and Road spending,” says Zack Cooper, a senior fellow at the American Enterprise Institute. However, the question remains whether the United States can seize this opportunity effectively.

Fast Growth, High Debt

Countries in the Middle East, Central Asia, and sub-Saharan Africa are projected to achieve GDP growth rates between 3.2% and 5.0% next year, outpacing the United States and global growth. Yet, they face significant challenges due to climate change and aging infrastructure. The COVID-19 pandemic, rising inflation, and U.S. interest rate hikes have also made their debt burdens increasingly unsustainable.

The Role of Belt and Road

China’s Belt and Road initiative, once a beacon of hope, has contributed to the debt crisis. China’s extensive lending has dried up, leaving many countries struggling to repay their debts as interest rates rise. Washington believes that a reformed World Bank can address the needs of the Global South and align with U.S. interests.

A Credible Alternative

Jake Sullivan, Biden’s national security adviser, emphasizes that “World Bank reform is not about China.” Still, the White House acknowledges the need to offer a credible alternative to China’s lending and infrastructure projects for developing countries. This reflects the United States’ determination to stand up to China in economic matters.

Navigating Geopolitical Waters

Biden’s foreign policy agenda includes addressing Russia’s Ukraine conflict, managing competition with China, and rebuilding U.S. alliances. While these efforts have resonated with traditional U.S. partners, they have been met with caution by developing countries like Brazil, India, and South Africa, which aim to avoid getting entangled in the power struggle between Washington, Beijing, and Moscow.

Conclusion

As President Biden takes the stage at the G20 meeting, his commitment to reshaping the economic landscape of the Global South is evident. With China’s absence and a clear vision for World Bank reform, he hopes to offer a viable alternative to Belt and Road. However, the road ahead is uncertain, and success hinges on the United States’ ability to navigate complex geopolitical waters.

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FAQs

1. What is the Belt and Road project?

The Belt and Road project is China’s ambitious infrastructure and economic development initiative that aims to connect Asia with Europe and Africa through a network of roads, railways, ports, and other infrastructure projects.

2. How has China’s Belt and Road project impacted developing countries?

While it has provided much-needed capital for development, it has also left many countries in significant debt and reliant on Chinese financing.

3. What is the World Bank’s role in this scenario?

The World Bank is being considered as a potential alternative to China’s Belt and Road initiative, with proposed reforms to increase funding for climate and infrastructure projects in the developing world.

4. Why is the absence of Chinese President Xi Jinping significant at the G20 meeting?

Xi’s absence provides the United States with a unique opportunity to influence the G20’s agenda, given China’s economic uncertainties.

5. What challenges do developing countries in the Global South face?

Developing countries in the Global South face challenges such as climate change, aging infrastructure, unsustainable debt burdens, and the impact of the COVID-19 pandemic on their economies.
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