America’s manufacturers need aggressive support from the Export-Import Bank (Ex-Im), and under its chairman, Fred Hochberg, we are increasingly getting just that. Today’s Financial Times reports that Ex-Im is going to match China’s rules-busting offer to finance locomotives to Pakistan. China doesn’t follow the export financing rules agreed by major exporters (the OECD credit guidelines), even though it is now the world’s largest exporter. Instead, it uses its non-membership in this agreement to undercut others’ exports.
Ex-Im’s decision to provide matching U.S. financing for American locomotive manufacturers is extremely important in showing that the United States will not sit by and allow China to flout the rules. It is also important in that it shows Chairman Hochberg’s willingness to move quickly and decisively to support American exports more generally.
China, which gains so much from its undervalued currency, must not be allowed to compound that by providing subsidized financing to further tilt the playing field. It would be much better for China to announce it recognizes its global responsibility and that it will join in following the same rules as other major players. But as long as it doesn’t, Ex-Im needs to continue matching China in every transaction possible.
