Ex-Im’s Lapse Is A “Good Thing” For China: As President Xi Meets With President Barack Obama, U.S. Businesses Lose Out
While the President of China, Xi Jinping, meets with President Barack Obama, China’s exporting manufacturers will be actively growing their market share across the globe, in many cases at the expense of U.S. manufacturers.
The reason? Congress let the U.S. Export-Import (Ex-Im) Bank’s charter expire in June, leaving manufacturers without access to critical Ex-Im Bank financing. Meanwhile, Chinese companies have ample access to unprecedented financing from China’s multiple export credit agencies (ECAs).
In the past two years alone, China’s ECAs have financed more than $670 billion in exports. That’s more than the U.S. Ex-Im Bank has financed over its entire 80-year lifetime!
As China actively promotes its version of the Ex-Im Bank on billboards, at bus stops, and at airports, U.S. exporters are losing deals and laying off workers.
A “Good Thing” For China
Just before the U.S. Ex-Im Bank’s charter expired, Zhao Changhui, chief country risk analyst at the Export-Import https://exportersforexim.org/files/files/bank of china, said that ex-im’s closure is a “good thing” for China. Without ECA financing, U.S. exporters are now unable to bid on certain projects, like a recent satellite deal that U.S.-based Orbital ATK lost to a Canadian company, or offer competitive financing terms.
So, since June 30, U.S. small business exporters have either been unable to bid on new deals or have had to compete not just with Chinese exporters, but also China Inc. In 2014 alone, Ex-Im financing helped more than 3,000 small businesses exporters. Now that U.S. exporters don’t have Ex-Im financing, their competitors in countries like China will have an even greater advantage.
And even before that, the U.S. ranked last among major exporters in export financing as a percentage of GDP.
Missed Opportunities: China Is Capitalizing On Congressional Inaction Over Ex-Im
Here are just two of the many examples of how China is capitalizing on Congressional inaction over the Ex-Im Bank:
- On July 1, the Export-Import of China Bank announced a $1 billion deal with CMA CGM group, a European company, to the finance their purchase of high-end ships, containers, and port machinery manufactured in China.
- Also in July, China announced the injection of $93 billion into two of its development banks. The injection included $45 billion specifically for the Export-Import Bank of China. As a point of reference, the U.S. Ex-Im Bank, in the entirety of 2014, only authorized $20.5 billion in financing.
These recent announcements from China are only part of a broader, sweeping effort by China to expand its influence around the globe through the use of ECA financing.
- In June, China announced an additional$62 billion in financing for the China Development Bank and Export-Import https://exportersforexim.org/files/files/bank of china for the “Silk Road Fund,” which will support infrastructure projects in the countries near China.
- In 2013, China pledged $1 trillion in trade financing to Africathrough 2025.
- In May 2014 Chinese Premier Li Keqiang announced an extension of an additional $10 billion in its line of credit to Africa, bringing China’s total available credit up to $30 billion on the continent.
So while China is moving forward, U.S. companies are left without access to critical financing. So when is Congress going to vote on the Ex-Im Bank?