June 15, 2011 / 9:51 PM / 8 years ago

U.S. must confront China export advantages: Eximbank

WASHINGTON (Reuters) - The United States needs to use its export financing tools more aggressively to confront growing competition from China and other developing countries not bound by the same rules as rich nations, the head of the U.S. Export-Import Bank said on Wednesday.

“We must reorient and adjust ourselves for a very different global landscape — one with new players and new types of engagement,” Eximbank President Fred Hochberg said in a speech on the competitive pressures U.S. exporters face.

That could include stretching the rules on export credits that apply to rich countries that make up the Organization for Economic Cooperation and Development to pressure China and other developing countries into negotiations on new rules, he said.

Hochberg attributed the rapid ascent of Chinese telecoms manufacturer Huawei Technologies HWT.UL to a $30 billion credit line from the Chinese Development Bank he said allowed it to offer its customers better financing terms than its competitors.

“In less than 15 years, they have positioned themselves ahead of global leaders like Nokia NOK1V.HE and Siemens (SIEM.NS). In India, Huawei grew to $2.5 billion in sales from $50 million in one year,” Hochberg said.

“Folks, that kind of growth takes more than just good sales and marketing strategies,” he said, adding Chinese “state-directed capital” also threatened U.S. market share in renewable energy, aviation, biotechnology and capital goods.

Hochberg’s speech coincided with the Eximbank’s annual competitiveness report, which for the first time took an in-depth look at export credit practices used by emerging economies such as Brazil, India and China.

Those three countries now provide more export financing than the combined nations of the G7, which comprises the United States, Japan, France, Germany, Britain, Canada and Italy, Hochberg said.

He added that none of the developing countries was bound by the same export financing rules that G7 countries face as members of the OECD.

He cited a recent example involving a $500 million rail project to supply 150 locomotives to Pakistan.

China offered more generous financing terms than OECD rules allow, threatening a possible sale by American manufacturers GE

(GE.N) and EMD Locomotives, Hochberg said.

Eximbank responded by informing the OECD it intended to offer similar financing to help make the sale.

“When we see a clear example that state-directed capital is impeding a sale for an American company, we will go the extra step to offset the market distortion,” Hochberg said.

While Pakistan has not decided on a supplier, an important precedent was set that other OECD countries should consider following, he said.

Ultimately, that could put pressure on China to agree to rein in its practices and abide by the same terms and conditions as OECD members, Hochberg said.

Reporting by Doug Palmer; Editing by Peter Cooney

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