UK overhauls development investment body to challenge influence of Chinese loans
Foreign secretary Liz Truss has revamped the UK’s development investment arm in a bid to offer emerging economies an alternative source of private capital to Chinese loans that can counter Beijing’s influence and avoid “bad and unsustainable debt.”
Truss launched British International Investment (BII) this morning at the London Stock Exchange, a body that will invest in infrastructure and technology in low and middle income countries across Asia, Africa and the Caribbean.
The Foreign Office announcement today was weighted with implications, and the move seems to be aimed at countering China’s influence in these emerging economies, where its “strings-attached” loans are considered by some western governments as a tactic for wielding influence.
“BII will prioritise sustainable infrastructure investment to provide a clean, honest and reliable financing and avoid low and middle income countries being left with bad and unsustainable debt,” it said in a statement.
The new body is a revamped version of the government’s Commonwealth Development Corporation Group, which has been widely criticised for favouring high financial returns on its investments, which have included luxury hotels, gated communities and private hospitals, rather than tackling poverty in the least developed economies.
According to the BII announcement, the government plans to mobilise up to £8bn a year of public and private sector investment in international projects by 2025. It plans to help the private sector move in on the project, which will include partnering with capital markets and sovereign wealth funds to scale up financing.
“When freedom-loving democracies invest in infrastructure and supply technical expertise, it makes countries freer, wealthier and more secure,” said UK foreign secretary Liz Truss.
“Too many countries are loading their balance sheets with unsustainable debt. Reliable and honest sources of finance are needed. Britain and our allies will provide that, with British International Investment a key delivery vehicle.”
Diana Layfield, who is currently a president at Google, as well as a non-executive director at AstraZeneca, has been appointed as Chair of the BII and a non-executive director on the board, subject to the FCA’s approval.
Truss has repeatedly taken aim at China in the past, underlining its lack of “shared values” and implying it doesn’t “play by the rules” when it comes to key areas of investment like technology. Last month, she used her Conservative party speech to plot a new series of security alliances to strengthen the west against “malign actors.”
In an interview with the Financial Times ahead of today’s announcement, Truss said the new BII will follow a set of defined standards.
“Standards over transparency, standards over property rights, and standards over the protection of personal freedoms,” she said.
“That will help those countries get the infrastructure and other finance they need to develop in a way that doesn’t have the strings attached or the opacity of other finance offers.”
The exact amount of funds allocated to the new BII is yet to be announced by the government.