WASHINGTON—The United States needs to strengthen its export credit agency to tackle China’s “ambitions to displace American companies in strategic industries,” Secretary of Commerce Wilbur Ross said on Sept. 10.
Speaking at the virtual annual conference of the U.S. Export-Import Bank (Exim), Ross stressed the importance of the export credit provider in countering the economic and national security challenges from China.
However, Exim has lagged and “must evolve in a similar manner,” he said.
In December, President Donald Trump signed into law a seven-year reauthorization of Exim, the longest extension in the agency’s 86-year history. The law has established a new “Program on China and Transformational Exports” that targets Chinese export subsidies around the globe.
Ross said the China Export Credit and Insurance Corp. (Sinosure) provided $481 billion of short-term export credit in 2019, compared to $2 billion provided by the U.S. Exim Bank. The U.S. bank lost a quorum on its board of directors in 2015 and was unable to approve large transactions for nearly four years.
“We will support Exim’s new program to counter Chinese mercantilism and thwart that nation’s ambitions to displace American companies in strategic industries,” Ross said.
“We must revisit all policies that make us less competitive with our peers across the world. We must find ways to provide export financing to our most important technology industries such as AI, biotechnology, advanced computing, semiconductors, and financial technologies.”
In response, Exim has stepped up its programs to help companies that face shipment problems, payment difficulties, liquidity problems, or other business interruptions caused by the pandemic.
As part of the relief efforts, the export agency established a temporary bridge finance program to help foreign buyers get short-term financing for their purchases of U.S. goods and services. The program is intended to address scarce credit options because of the pandemic.
The bank also has expanded its existing working capital and supply-chain finance programs to help exporters navigate through the turbulent times.
The export credit agency’s relief efforts come at a time when private sector insurers or banks have discontinued or reduced trade financing due to uncertainty and liquidity issues.
Speaking at the conference, Rep. Andy Barr (R-Ky.) said he proposed legislation to increase the percentage of financing to 33 percent from 20 percent to support U.S. businesses that compete directly with exports from China. He also proposed to raise the default rate cap from 2 percent to 5 percent.
“We want Exim to be aggressive in finding deals and in its transactions and its posture to counter China’s Belt and Road Initiative,” he said.