Wary of China's rise, Pompeo announces US initiatives in emerging Asia

U.S. Secretary of State Mike Pompeo on Monday announced $113 million in new technology, energy and infrastructure initiatives in emerging Asia at a time when China is pouring billions of dollars in investments into the region.

Amid increased U.S. trade frictions with China, Pompeo’s announcement sought to build on President Donald Trump’s “Indo Pacific” strategy that aims to cast the United States as a trustworthy partner in the region.

Pompeo said the United States was seeking a “free and open” Asia without domination by any one country, in what appeared to be a reference to China’s growing economic clout and heightened tensions in the disputed South China Sea.

“Like so many of our Asian allies and friends, our country fought for its own independence from an empire that expected deference,” Pompeo told the U.S. Chamber of Commerce business group. “We thus have never and will never seek domination in the Indo-Pacific, and we will oppose any country that does.”

“These funds represent just a down payment on a new era in U.S. economic commitment to peace and prosperity in the Indo-Pacific region,” Pompeo said.

Pompeo said he would visit Malaysia, Singapore and Indonesia this week, where he planned to announce new security assistance.

A senior U.S. official said the American investments were not aimed at countering China’s Belt and Road Initiative, which involves dozens of countries in an estimated $1 trillion of mostly state-led infrastructure projects linking Asia, parts of Africa and Europe.

Eswar Prasad, a Cornell University trade professor and former head of the IMF’s China division, said the U.S. initiatives were small in comparison to Chinese investments.

“In both scale and scope, these initiatives pale in ambition relative to comparable initiatives by China,” Prasad said. “It also highlights the distinction between China’s approach of bold and grand government-led initiatives and the much more modest role of the U.S. government.

‘AMERICA FIRST’

Countries in the region have been worried by Trump’s “America first” policy, withdrawal from the Trans Pacific Partnership trade deal and pursuit of a trade conflict with China that threatens to disrupt regional supply chains.

The United States first outlined its strategy to develop the Indo-Pacific economy at an Asia-Pacific summit last year.

“Indo-Pacific,” defined by Pompeo as a region stretching from the U.S. West Coast to India’s west coast, has become known in diplomatic circles as shorthand for a broader and democratic-led region in place of “Asia-Pacific,” which from some perspectives had authoritarian China too firmly at its center.

Among the new investments outlined by Pompeo, the United States will invest $25 million to expand U.S. technology exports to the region, add nearly $50 million this year to help countries produce and store their energy resources and create a new assistance network to boost infrastructure development.

Pompeo said the United States has signed a $350 million investment compact with Mongolia to develop new sources of water supply. The Millennium Challenge Corporation, a development agency of the U.S. government, was also finalizing an agreement to invest hundreds of millions of dollars in transportation and other reforms in Sri Lanka, Pompeo said.

Speaking at the same event, U.S. Commerce Secretary Wilbur Ross said the United States has eased export controls for high-technology product sales to India.

Ray Washburne, president of the U.S. government’s Overseas Private Investment Corporation, also said the agency has $4 billion invested in the region and hopes to double that figure “in the next few years.”

Speaking to reporters before Pompeo’s speech, Brian Hook, senior policy adviser to Pompeo, said the United States was not competing with China’s mostly state-led initiatives.

“It is a made-in-China, made-for-China initiative,” Hook told reporters on a conference call. “Our way of doing things is to keep the government’s role very modest, and it’s focused on helping businesses do what they do best.”

Critics of Beijing’s Belt and Road Initiative, which aims to recreate the ancient Silk Road trade route, have said it is more about spreading Chinese influence and hooking countries on massive debts. Beijing has said it is simply a development project that any country is welcome to join.

Hook said Washington welcomed Chinese contributions to regional development, but said it wanted China to adhere to international standards on transparency, the rule of law and sustainable financing.

“We know that America’s model of economic engagement is the healthiest for nations in the region. It’s high-quality, it’s transparent and it is financially sustainable,” Hook said.

Additional reporting by Marius Zaharia in Hong Kong, Daphne Psaledakis and David Lawder in Washington; Editing by Simon Cameron-Moore, Jonathan Oatis and Will Dunham