Initiative for U.S.-China Dialogue on Global Issues

In the last five years, the trade war, pandemic-related shortages, and escalating tensions over Taiwan and the South China Sea have cast a shadow over U.S.-China relations, making it complicated for nations to collaborate on the pressing global issues. Fortunately, the recent Asia-Pacific Economic Cooperation (APEC) summit held in San Francisco in November 2023 defied the expectations of commentators who anticipated both nations would remain entrenched in their grievances. Prospects of cooperation between two major global powers finally resurfaced as Presidents Joe Biden and Xi Jinping reached an agreement on matters of trade and security, laying the foundation for future cooperation surrounding commerce, climate change, global health, and developmental assistance.

Interestingly, the first three meetings for the Georgetown University Initiative for U.S.-China Dialogue on Global Issues' U.S.-China Student-to-Student Dialogue 2023-2024 cohort coincided with the APEC summit, serving as a symbolic representation of the wider negotiations at hand. As a Georgetown University representative, during the fall I had the chance to meet up with peers from leading U.S. and Chinese institutions to discuss the pressing need for U.S.-Chinese cooperation on global matters, focusing on the responsibility each nation held toward the Global South. Engaging with peers from leading institutions provided an excellent platform to examine the complex picture of U.S.-China relations, transcending the simplistic media-like representation of the rivalry amongst the country governors.

Finding the topic of development financing particularly intriguing, our discussions revealed that the U.S.-China rivalry did not leave the financial industry unaffected, with the rising competition encouraging both nations to take up leadership roles in administering loans to the Global South. However, in this matter the playing field is not even for the United States and China. While traditional Western lending institutions such as the World Bank and the International Monetary Fund (IMF) have been in place since World War II, the Chinese Belt and Road Initiative is a relatively recent phenomenon, gaining momentum over the past decade. 

Both Western and Chinese financial institutions have garnered support as well as criticism over their lending practices to the Global South. For developing nations aspiring to receive loans from the IMF and World Bank, the Washington Consensus (developed in the 1990s) requires governments to implement Structural Adjustment Programs (SAPs) that reform the areas of fiscal discipline and taxation, implement trade liberalization policies, open economies to foreign direct investment, as well as privatize and deregulate the economy. Because SAPs favor neoliberal policies, the World Bank and IMF put pressure on developing nations to pursue a particular development trajectory, making the system unfair as the decision-making power that economic policies adopt is stripped away from local governments. 

Resolving the mistrust and existing barriers posed by SAPs that prevent developing nations from receiving loans from the IMF and World Bank has led to the rising role of China in the development financing sector. The development banks borrow as part of the Belt and Road Initiative and serve to challenge the status quo of lending practices in South Asia and East Africa in particular. 

As the United States seemingly steps back from its post-Cold War leadership role, China is stepping up. The disappointment with the West, particularly among countries in the Middle East, North Africa, East Africa, and South Asian regions, has accelerated this shift. This skepticism poses challenges for the United States, hastening its diminishing influence in providing loans through the IMF and the World Bank to developing nations and perhaps encouraging it to rethink the Washington Consensus overall. For China to sustain its growing role in development financing, it is critical to overcome challenges associated with its unsustainable lending practices.

Elene Chkhaidze (SFS'25) is a junior majoring in international politics with a minor in Arabic at Georgetown University in Qatar.