US Treasury Secretary Janet Yellen is set to ask Congress to lend more money to developing countries to counter China's growing influence, according to a copy of her prepared remarks viewed by CNN.
In addition to increasing lending to other International Monetary Fund programs, Yellen intends to tell lawmakers that the Biden Administration wants to boost involvement in the Inter-American Development Bank group's private-sector investment fund and the African Development Fund.
"These investments will bolster our engagement in these regions at a time of geopolitical competition," Yellen intends to say in her testimony before the House Financial Services Committee on Tuesday. Lending to organizations like the IMF "serves as an important counterweight to nontransparent, unsustainable lending from others like China."
Between 2008 and 2021, China spent $240 billion bailing out 22 countries that are "almost exclusively" debtors in Xi Jinping's signature Belt and Road infrastructure project, including Argentina, Pakistan, Kenya and Turkey, according to a recent study.
But many of the countries it has lent to are struggling to repay the loans, which could put their citizens in deeper levels of poverty. China has called upon the World Bank and IMF to help bail out some of the countries, but it hasn't been transparent about the terms of the loans and other crucial details.
Yellen testified earlier this year that she is "very, very concerned about some of the activities that China engages in globally - engaging in countries in ways that leave them trapped in debt and don't promote economic development."
"We are working very hard to counter that influence in all of the international institutions that we participate in," she said at the time.
Yellen also intends to tell lawmakers that she is "relieved" that lawmakers "took action to address the debt limit in time."
"But while we were able to avoid default, the United States once again came dangerously close to the line. This cannot be normalized as the way we do business in Washington," according to her prepared remarks.
The debt ceiling talks dragged on for months before lawmakers eventually reached a deal to suspend the debt limit for two years. Such last-minute action "hurts our global leadership and credibility on the world stage," Yellen is set to tell lawmakers on Tuesday.
Fitch Ratings warned that it is still considering downgrading US debt despite the last-minute deal that Congress passed.
- CNN's Jessie Yeung contributed to this report.
