U.S. Discontent with Chinese Export Subsidies: EXIM Chairman, Reports Reuters

By Sue-Lin Wong

BEIJING (Reuters) – A senior U.S. trade official expressed concerns on Tuesday regarding China’s increasing export subsidies and their adverse effects on American businesses. He also criticized the U.S. political landscape for not adequately responding to competition from China.

Fred Hochberg, Chairman of the U.S. Export-Import Bank (EXIM), informed reporters in Beijing that in 2015, China provided its exporters with financing that was ten times greater than that offered by the U.S. He anticipates that this issue will be discussed during the upcoming G20 summit in Hangzhou next month.

In 2015, the U.S. EXIM approved $12.4 billion in export financing. During his visit, Hochberg noted that the Export-Import Bank of China lent $30 billion the previous year, in addition to $471 billion from another agency, Sinosure, which supports Chinese businesses and investments abroad.

Hochberg expressed disappointment that China has not yet committed to a global framework for regulating export subsidies. He emphasized the necessity of China’s participation, stating, "China’s the second largest economy in the world and the largest exporter; they really need to be part of this (framework)," while criticizing Beijing’s tendency to pursue "side deals."

When questioned about China’s potential agreement to such a global framework, Hochberg cautioned that failure to engage could lead to a "race to the bottom." His remarks come as China recorded another substantial trade surplus in July, despite a decline in imports from trading partners.

Some U.S. politicians are advocating for retaliatory measures against China, including presidential candidate Donald Trump, who has proposed a 45 percent tariff on all Chinese imports. A report released by U.S. EXIM last year indicated that China’s export financing exceeded what U.S. EXIM has provided over its 81-year existence within a two-year span.

"China is both a competitor and a customer," Hochberg acknowledged, emphasizing the need for a more nuanced perspective on the bilateral relationship.

He also critiqued the U.S. Congress for inadequately supporting EXIM, which has undermined its negotiating strength and resulted in over $20 billion worth of pending deals. "It’s confounding to U.S. exporters, it’s confounding to U.S. workers, and it’s confounding to our overseas buyers," he stated.

The bank was previously inactive for five months last year due to accusations from conservative legislators regarding "corporate welfare." While the bank has since been reauthorized, the confirmation of a third board member—necessary for approving loans exceeding $10 million—has been stalled by the Senate Banking Committee Chairman.