US$60b challenge to China's 'debt diplomacy'

US PRESIDENT Donald Trump on Saturday signed into law a landmark bill which will create a US$60 billion new agency aimed at strategic investment in developing countries. The proposed International Development Finance Corporation (IDFC) is the latest step in Washington's response to China's growing influence and marks a return to US aid policy with commercial diplomacy and geopolitics centrestage.

This, of course, recalls the earlier era of the legendary Marshall Plan which saw US commercial and development interests converge in the early Cold War era of the 1940s and 1950s. The proposed new IDFC will become the pre-eminent US government development finance institution advancing US interests in multiple ways.

This includes supporting US firms operating in key developing markets. And enhancing US geopolitical influence vis-a-vis other countries, including China and Russia, which are embedding their own engagement in emerging markets which have driven around 80 per cent of global growth since the 2008 international economic crash.