Alarmed by China’s increasing financial presence in South Asia, US lawmakers are highlighting the rising debt levels in countries like Pakistan and Sri Lanka. During a recent congressional hearing on the Export-Import Bank of the United States (EXIM), lawmakers from both parties raised concerns about China’s state-backed financing reshaping economic and strategic dynamics in key global regions.
Representative Zach Nunn described China’s financial approach as “debt trap diplomacy,” citing Pakistan’s $77 billion and Sri Lanka’s $11 billion debts to Chinese state lenders. Committee Chairman Warren Davidson emphasized the growing challenge posed by China, noting its status as the world’s largest provider of export credit operating outside established international frameworks.
China extended over $23 billion in medium- and long-term export credit in 2024, surpassing the United States significantly. Jovan Jovanovic, president of EXIM, highlighted the tough competition American companies face in markets influenced by substantial state support and subsidies.
The US response centers on the China and Transformational Exports Program (CTEP) to assist American exporters in competing where China dominates. Lawmakers expressed concerns about China’s lending practices, particularly in infrastructure and resources, leaving developing nations financially vulnerable and raising sustainability questions.
Jovanovic stressed the importance of offering a different model based on transparency and market-driven partnerships to counter China’s practices. Discussions during the hearing included “Project Vault,” a proposed $10 billion initiative to establish a strategic reserve of critical minerals domestically, reducing reliance on foreign supply chains, especially those tied to China.
Representative Joyce Beatty highlighted the role of the bank in enabling US companies to compete globally, with a focus on supporting small businesses. As Congress prepares to reauthorize EXIM, there is a consensus among lawmakers on the necessity to enhance tools to effectively compete with China’s expanding global influence.
