Congress, eying China, votes to overhaul development finance

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WASHINGTON (Reuters) – The U.S. Senate on Wednesday passed legislation overhauling how federal government lends money for foreign development, preparing a $60 billion agency intended largely to respond to China’s growing influence.

The Senate passed the more effective Utilization of Investments Ultimately causing Development (BUILD) Become part of a bill to reauthorize the federal government Aviation Administration, which gone 93 to 6. The entire package, which in fact have already been authorized by the House of Representatives, can be sent to President Mr . trump, who is required to sign it into law.

The measure creates a new agency, the U.S. International Development Finance Corp, that consolidates the Overseas Private Investment Corp (OPIC) besides other government development organizations.

Those institutions lend money for projects just like energy, ports and water infrastructure in developing countries.

The White House said in the statement that Congress procured an important step toward fulfilling Trump’s resolve for reform development finance institutions “so that they better incentivize private-sector investment in emerging economies and gives strong choices to state-directed initiatives associated with hidden strings attached.”

Backers in the bill argued that OPIC had to be modernized and U.S. lending generally made more sound to keep up with China’s increasing investment around the globe.

U.S. officials have worried that countries are already falling victim as they call China’s “debt trap” diplomacy, giving up control of major assets like ports or roadways once they fund infrastructure projects with Chinese loans which they cannot reimburse.

OPIC, which aims to transfer U.S. interests by lending to overseas small business ventures and makes money for any U.S. Treasury, had fall under fire from critics who say private banks are the best suited to make investment decisions.

Ray Washburne, OPIC’s president, told Reuters the previous week that the bill allows the new development agency to look at an equity stake in projects as opposed to just lend money. Additionally it will allow agency provide political risk insurance to assist foster private purchase of emerging markets, a locale where competition from Chinese enterprises has become particularly fierce.

Trump just last year proposed cutting funding for virtually every new OPIC projects. However, the Trump administration the year 2010 has supported production of the new entity.