Truss to back Commonwealth deals to beat Chinese influence

THE Government is to thwart China’s attempt to buy up the Commonwealth by underwriting British-backed deals.

The Foreign Office Development Strategy, expected in the next month, will focus on investment and projects in countries where China is providing cheap infrastructure.

The move to pull the rug out from underneath authoritarian regimes is thought to be designed to allow the UK to reshape its place on the world stage.

It will target current and former Commonwealth countries in South-east Asia and the Caribbean which have become increasingly dependent on China in recent years. Beijing has invested £685billion across 42 Commonwealth countries since 2005.

A government source said: “Liz believes the more you boost development, the more you boost trade and investment, the more you bring countries into the UK and democratic sphere of influence.”

While China’s investment model involves saddling developing countries with debt, and providing cheap infrastructure, the UK is expected to provide infrastructure and economic ties that last and can lead to further deals for British businesses.

The Foreign Office is shaking up its strategy for international development, after an almost £5billion cut to the amount the UK sends abroad from 0.7 to 0.5 per cent of gross national income.

On Tuesday, the Government confirmed it was halving its support for the World Bank’s development programme, a cut of £1.5billion. The UK was previously the biggest contributor, ahead of the US and Japan.

The Foreign Secretary is intent on shifting the UK’S money away from multinational institutions such as the World Bank, which make their own decisions on where and how to spend, to British deals which now align with the policy priorities of Ms Truss’s department.

Although it is not explicitly linked to trade deals that the Government is signing across the world, these new areas of investment will provide the bedrock for British companies to invest.

This will mean some projects abroad, which investors may have given a wide berth due to a lack of guaranteed return, are set to be underwritten to provide more certainty and opportunities for UK businesses to make money.

There will be renewed focus on the renamed British International Investment, formerly the Commonwealth Development Corporation (CDC), the London Stock Exchange-listed firm which invests in international development, and brings in private investors.

Last year, the CDC saw off bids by a Chinese-backed rival to win a licence for telecoms in Ethiopia as part of an international consortium of businesses.