Biden doubles down on emerging markets as Xi snubs G20

US President Joe Biden arrives at this weekend’s Group of 20 (G20) meeting in India with an offer for the “Global South”: whatever happens to China’s economy, the United States can help fund your development.

Armed with cash for the World Bank and promises of sustained US engagement, Biden hopes to persuade fast-growing economies in Africa, Latin America and Asia that there is an alternative to China’s Belt and Road project, which has funneled billions of dollars to developing countries but left many deeply in debt.

He will have at least one advantage: Chinese President Xi Jinping will not be at the meetings.

While Biden said he was “disappointed”, Xi’s absence as China’s economy wobbles creates a narrow opening for Washington to reshape the agenda of a political club it has struggled to corral.

At the heart of Biden’s pitch are World Bank reform proposals and stepped-up funding for the lender’s climate and infrastructure aid in the developing world, which would free up hundreds of billions of dollars in new funding for grants and loans.

The White House is seeking $3.3 billion from Congress to complement earlier steps by the US and close allies to raise $600 billion by 2027 in public and private money for the Partnership for Global Infrastructure and Investment, a Belt and Road alternative that excludes China.

“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,” said Zack Cooper, a senior fellow focused on Asia at the American Enterprise Institute.

“But the question … is whether the United States will be able to step up.”

Chinese Premier Li Qiang will represent China at the G20 as its leaders cope with sagging growth and a possible property debt crisis. Russian President Vladimir Putin is also skipping the event, sending Foreign Minister Sergei Lavrov.

The IMF forecasts that the Middle East, Central Asia, developing countries in Asia and sub-Saharan Africa will deliver between 3.2% and 5.0% GDP growth next year, faster than the 1.0% they projected for the United States and 3.0% globally.

But those countries face serious challenges to reach their potential as climate change tests aged, often colonial-era infrastructure.

The COVID-19 pandemic, higher inflation and rising US interest rates have conspired to make those countries’ debt burdens increasingly unsustainable, causing fears of problems similar to the Asian financial crisis that prompted the creation of the G20 in 1999.

Xi’s decade-old Belt and Road initiative has played a role. China has lent hundreds of billions of dollars as part of the project, which envisaged Chinese institutions financing the bulk of the infrastructure in mainly developing nations.

Yet the credit has dried up in recent years and many countries are struggling to repay their debts as interest rates rise.

Washington thinks a rebooted World Bank could meet the Global South’s needs and serve its own interests.

“Even the last administration – the biggest skeptic of all of this – made investments in foreign aid because those investments are in the naked self-interest of the United States, as well as being the right thing to do,” said Jake Sullivan, Biden’s national security adviser, referring to former President Donald Trump’s administration.