November 10, 2017

What Does Trump’s Trip to Asia Have to Do With Africa? Actually, a lot.

By Megan Rabbitt

While all eyes are on President Trump’s whirlwind 12-day, 5-country tour of Asia, there’s been another narrative is playing out across the Indian Ocean: China’s growing influence in Africa.

At a time when the administration has proposed scaling back development assistance, China has been dramatically scaling up its footprint in Africa. In the last decade alone, Chinese development assistance to the continent has increased by 780%. And China recently pledged hundreds of billions of dollars to its One Belt One Road initiative – a massive infrastructure and development initiative designed to give Chinese companies a leg up in emerging markets throughout Africa and beyond.

Chinese dominance in these lucrative new markets could put American companies at a competitive disadvantage – and with 95% of consumers living outside our borders and some of the world’s fastest growing economies in Africa, we can’t let the opportunity to access and build these markets pass by America’s companies.

At the same time, developing countries stand to lose more than they gain from Chinese investment. Speaking at an event in Washington D.C. last month, Secretary of State Rex Tillerson offered a rebuke of China’s “predatory economic practices” in the developing world. He specifically called out Chinese infrastructure projects that ship in Chinese laborers rather than create local jobs, leave host countries saddled with debt they can’t repay, and include “subtle triggers” in the financing that can convert host country equity into collateral.

China doesn’t play by the same rules, and will gladly fill any void America leaves behind. Taking a backset to China is not an option, which is why America needs to strengthen investments in Africa.

In fact, we know that investing in development works – and three of the countries on President Trump’s Indo-Pacific trip remind us exactly why. American development assistance helped transform Japan, South Korea, and Vietnam from war-ravaged nations into major export markets and key allies in a region where we need allies and partners.

  • The United States invested a mere $2.2 billion in Japan’s reconstruction effort following World War II. And today, Japan is not only a strong democracy and one of the world’s largest economies, but a key ally in an increasingly volatile region and our fourth largest export market. With U.S. exports to Japan averaging more than $60 billion a year, our initial investment has been more than repaid scores over.

  • South Korea had a similar experience after the Korean War, which left the country poorer than two-thirds of all sub-Saharan Africa. The U.S. invested $35 billion in aid over several decades, ultimately transforming South Korea into the world’s 11th largest economy and the United States’ 7th largest export market. What’s the return on investment here? Last year alone, the U.S. exported more than $63 billion to South Korea. And to top it off, the country has gone from being a recipient of foreign assistance, to a donor.

  • President Trump’s stop in Vietnam highlights yet another remarkable turnaround story. In the last 25 years, poverty rates in Vietnam have plummeted from 70% to less than 10% And an initial $35 million investment by the U.S. to implement market-based economic reforms has helped boost U.S. exports to Vietnam from $460 million in 2001 to over $10 billion today.

These three countries each tell a remarkable story about the transformative power of U.S. foreign assistance. And in what is perhaps the best indication yet of the Administration’s interest in strengthening development tools to advance our economic interests, the President just announced the Administration’s new commitment to reform our nation’s development finance programs. Such an initiative would follow Tillerson’s calls for “alternative financing structures” to counter China’s One Belt One Road initiative, and could unlock opportunities for American companies across the region and world.