2024 Global Development Forum: Keynote Remarks by Deputy National Security Advisor Daleep Singh

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This transcript is from a CSIS event hosted on April 18, 2024. Watch the full video here.

Daniel F. Runde: OK. So, thanks, everybody, for reconvening. I’m thrilled that Daleep Singh, the newly reinstated deputy national security adviser for international economics for President Biden, is with us today to give some remarks. I really appreciate it.

Daleep Singh is a patriot and I’m really grateful that he said yes. He was in public service, he went to the private sector, and he’s now come back. These are hard, thankless jobs, total grinds, but are really important. 

So, and we’re lucky to have someone of his caliber and intellect and work stamina to take on such an important role at this time. So, within his role Daleep works to coordinate policy decisions across a range of sectors, from economic statecraft to climate finance and global growth. 

As I said, Daleep served in this role at the beginning of the Biden administration and was instrumental in designing the global sanctions imposed against Russia after its illegal invasion of Ukraine in February of 2022. 

Under President Obama, Daleep served as acting assistant secretary for domestic finance at the Treasury Department and as the deputy assistant secretary for international affairs at Treasury.

Outside of government Daleep has held senior roles at the New York Federal Reserve as well in the private sector and academia. So I think it’s really appropriate to have him come speak. I think it’s an interesting book.

And we had Chairman Gallagher speak this morning. It was probably his last speech as chairman of the Select Committee. He’s a longtime friend of mine. 

So, I think it’s really appropriate that you’re here because I think we’re going to hear similar themes. 

So, without further ado, Daleep, I’m going to have you come up and make some remarks. Thank you for being here. Please welcome Daleep Singh. (Applause.)

Daleep Singh: Well, if Chairman Gallagher could deliver a parting shot I guess I’m delivering something else because I’m a glutton for punishment. Yeah, there you go. But thank you – reopening salvo. There we are. 

Thanks, everybody, for coming. It’s really a pleasure to be here. So, I’m going to talk about American economic leadership and the post-unipolar era. A year ago National Security Adviser Jake Sullivan laid out the Biden-Harris administration’s vision for renewing American economic leadership. 

He talked about why a new approach was needed, the investments we’re making in our own resilience in productive capacity, and how we’re working with our partners to build an equitable and durable economic order with global appeal. 

America’s value proposition to our partners really comes down to this. We believe we all do better when we’re building, investing, and innovating in ways that are mutually reinforcing.

To our competitors the message from America is that we don’t see conflict but, rather, a level playing field in which we’re each striving to attract and develop the best ideas, talent, and investments, with benefits that spill over across the world.

So today I want to talk about the progress we’re making, even in the face of new challenges, and how we’re adapting and reimagining our economic alliances, our economic tools, our economic institutions, to compete and drive in an environment of more intense global competition.

First, a bit about America’s comeback story since the pandemic. As we all know, America’s economic leadership starts at home, and we’ve had a truly remarkable recovery since 2021. It’s a rebound that’s been rapid, broad, and equitable. In President Biden’s first term, the U.S. economy has added 15 million jobs – that’s the most in history – the unemployment rate has remained below 4 percent; the longest stretch in more than 50 years. This recovery has benefited all demographic and income groups. The Black and Latino unemployment rates have hit at all-time lows under this administration. Disproportionately high rural unemployment rates prior to the pandemic have disappeared. Prime age labor force participation for women has surged to record highs. The hot labor market has translated into greater bargaining power for workers, whose wages had lost grounds relative to productivity gains over the past 50 years. Hourly wage growth is now above inflation, and strongest at the bottom of the wage distribution.

Of course, the president’s top priority on economics is to deal with higher prices. And there is more work to be done. But it’s no small feat that inflation has fallen by nearly two thirds from the peak. Even accounting for higher prices, the average American’s purchasing power is up, and the median household is benefiting from record levels of net wealth. It’s why, despite the endless ink spilled about the vibes towards this economy, consumers are spending, companies are investing, and new business creation is booming.

The bottom line is the United States has built back better, both relative to history and other countries. GDP growth has surpassed the pre-pandemic trajectory, and real-wage growth is the strongest of any major economy. None of this was destiny; it’s the product of deliberate choice, and no small part to the strategic investments NSA Sullivan talked about a year ago: The investments we’re making in the skills and the size of our labor force, the long overdue generational investments in our infrastructure, research and development, manufacturing capacity, and technological preeminence. Taken together, these are the ingredients of our productivity resurgence, which is powering the economy into rapid growth alongside disinflation and putting us on the cusp of a new wave of American ingenuity.

Now, the investments we’re making at home, they’re essential. But we’ve always known that America does best when our partners are also thriving. Our model is rooted in the pursuit of mutual gain. Now, maybe it’s easy for me to believe in that model because, like most people, I’m shaped by what I saw when I was coming of age professionally. I entered the workforce in the late 1990s, and what I saw unfolding in front of me was the post-Cold War unipolar order. Democracy was ascendant, geopolitical rivalries were fading, and the world became integrated like never before. In the years after the Berlin Wall fell, global trade doubled as a share of GDP. The EU unveiled the Euro. Russia joined the G-7, making it the G-8. The BRICS countries lifted hundreds of millions of people out of abject poverty. Just after the turn of the decade, China, of course, joined the WTO. 

Now, on the surface, the economy reaped the dividends. U.S. GDP growth averaged over 3 percent for the entirety of the 1990s. Inflation and interest rates fell continuously. Productivity growth entered a sustained boom. Technology was seen as an unambiguous force for prosperity and peace. It felt, to some, like a moment when the world was converging along ideological, economic, and political dimensions. The end of history comes to mind. 

And then it fell apart, and indeed, the cracks were visible long before it did so. For one, we now recognize that unfettered globalization and deregulation brought diffuse benefits, but also steep costs for many workers, communities, and the global commons. We were slipping into an equilibrium of low growth, low wages, low investment, low labor force participation, low productivity, rising inequality, punctuated by boom-and-bust financial cycles. As a corollary, it became apparent that markets left entirely to themselves simply aren’t designed to solve the biggest problems we face as a society, which are often distributional, or the byproduct of externalities. 

Second, geopolitical competition is back. Both Russia and China have expressed and revealed a desire to challenge the U.S.-led international order. Left on its own, this geopolitical backdrop might produce sustained uncertainty and more frequent conflict, just at a moment when we need more cross-border cooperation to address cross-border challenges like climate change, global health risks, food and energy insecurity, record migration flows, and debt distress.

Three, just as we’re competing more intensely across borders, many countries are being pulled apart from within by polarization. Besides narrowing the path to bipartisan governance, the degree of polarization in our current environment reduces the perceived credibility of policy and increases the risk of abrupt policy shifts. In part, this reflects the information environment. We no longer get the same information from the same sources precisely twice a day as we did in the 1990s. Instead, we’re saturated with information, 24/7, through competing echo chambers that produce a conflicting baseline of facts. 

Four, the transition from fossil fuels to clean energies – clean technologies as our primary source of energy is absolutely necessary and urgent, but market forces alone won’t lead to a smooth transition. Despite the parabolic growth in renewables deployment, clean energy will not fully substitute for fossil fuels in the near term. Meanwhile, both fossil fuel production and, even more so, the supply of renewable technologies and component materials is at risk of being weaponized for geopolitical advantage. The top clean energy producers – namely, China – command 60 to 90 percent market share for critical choke points, such as the processing of minerals that are critical for EV batteries like cobalt, graphite, lithium, and manganese.

Five, due in part to the lessons learned from the pandemic and Russia’s invasion of Ukraine, it’s clear we need to transition away from global supply chains with a singular focus on efficiency, towards arrangements with more regards for resilience to shocks – economic, geopolitical, climate, health, and otherwise. 

Lastly, because technology and innovation in areas like AI, quantum, and biotechnology are foundational for both economic growth potential and military preeminence – a reality brought home by China’s twin programs of military-civil fusion and Made in China 2025 – the risks of unconstrained technology diffusion for commercial purposes have come into sharp focus. 

If the state of the world has changed, then so must our vision of how to sustain and enhance American economic leadership. We have to work towards a new equilibrium, one that balances growth and equity, efficiency and resilience, innovation and sustainability, competition and interdependence. To suppose that we could execute this vision alone would be staggeringly self-defeating. We will need the broadest coalition possible.

Now, nowhere is the need for a broad coalition clearer than when it comes to China. As Secretary Yellen underscored in Beijing earlier this month, we want to have a productive economic relationship with China, but as she and the president have also made clear, we will not accept our industries being decimated as a result of China’s nonmarket policies and industrial targeting, the impacts of which are compounded by China’s imbalanced macroeconomic approach. As you all know, China is the world’s second-largest economy, with a 30 percent share of global manufacturing in value-added terms. This is up from 20 percent less than a decade ago, and almost certain to increase further as China surges state support into manufacturing to compensate for a declining property sector and sluggish growth elsewhere. China is already running historically unprecedented trade surpluses in manufactured goods. If Beijing continues to address its growth challenges by doubling down on manufacturing exports, without taking steps to boost domestic demand, it will spur imbalances that are simply untenable for the rest of the global economy. As National Economic Adviser Brainard said earlier this week, China is simply too big to play by its own rules.

To be clear, if China’s growing market share was merely the byproduct of innovation and productivity, we would welcome the positive spillovers to the U.S. and the rest of the world. But the unfortunate reality is that Beijing is not competing by the same rules. Aside from the discriminatory regulations and non-tariff barriers that give their firms a competitive advantage, Chinese firms benefit from massive state support – multiples greater than anything we’ve seen in the United States, Europe, Japan, Korea, or emerging markets. According to one recent study, China’s subsidies in the form of cheap land, energy, and credit are as much as three to nine times those offered in OECD countries, with 99 percent of listed PRC companies receiving direct subsidies. 

More fundamentally, China’s production trajectory now threatens to flood markets well beyond what global demand can plausibly absorb, undercutting the viability of our own investments in diversified supply chains, making the world more dependent on a single supplier, and increasing the potential for economic coercion. The effects are particularly pronounced in areas like solar batteries and EVs, but it’s not just these sectors. Telling signs of overcapacity are emerging across the economy. Domestic production trajectories are well above plausible estimates of global demand. Domestic and export price trends are decidedly downward. The percentage of China’s industrial companies that are loss making is the highest it’s been in twenty-five years. Capacity utilization rates have declined sharply in several industries, and market structures are becoming increasingly concentrated. 

We’ve seen the damaging effects of China’s strategy play out in previous decades, when the PRC targeted sectors like steel, aluminum, solar, and wind power for dominance. The president has been clear he won’t stand by and let this happen again. That’s why he announced a series of actions this week to protect the U.S. steel and aluminum industries from unfair competition. And we’re not alone in voicing these concerns or taking actions to address them. The European Union, Brazil, Turkey, Thailand, South Africa, Mexico, and India are among those that have done so as well. 

But look, we know we cannot restrict our way into prosperity. The only way to do so is by working, investing, and innovating together with our partners. And this work requires us to renew a positive vision for American economic leadership, one that delivers inclusive sustainable growth at home and abroad. One that’s based on partnership and mutual gain, not transactional zero-sum approaches. And one that’s grounded in the recognition that the story of America is fundamentally about forging connections, not breaking them. So let me turn now to how we might augment and reimagine our partnerships, our tools, and our institutions to meet the challenges we face and realize the possibilities before us. 

First, on partnerships, our charter economic alliance, the G-7 has never been more aligned or active. We have stood together with Ukraine, providing $40 billion in direct budget assistance alone, and moving in solidarity to immobilize Russian sovereign assets and enforce a price cap on Russian oil. We led a successful global effort to channel $100 billion to amplify the impact of the most recent IMF special drawing rights allocation to support developing countries. We’ve mobilized $15 billion to support food security efforts worldwide, and tens of billions more in high-standard infrastructure investments. We led donors in mobilizing $100 billion per year in climate finance to support developing countries. This is multilateralism at its most proactive and consequential.

The challenges of a more competitive world make it even more important that the U.S. shows up with active leadership at the G-20. Indeed, we reject a bloc mentality to global partnership. That’s why we’re strongly supporting Brazil’s priorities for its G-20 presidency, including poverty and inequality reduction, workers’ rights, the clean energy transition, and reinforcing multilateral institutions to better deliver on their collective promise. And the U.S. is doubling down on our own commitment to partner with the world’s largest economies by hosting the G-20 in 2026.

Elsewhere, through innovative partnerships and initiatives like the Indo-Pacific Economic Framework and the Partnership for Global Infrastructure and Investment, we’re driving progress in areas that will underpin our and our partners’ future economic success. Investing in clean energy, building a more resilient supply chain, and mobilizing our private sector – a key competitive advantage. Over just the past 16 months, we’ve launched new critical and emerging technology initiatives with India, Singapore, and Korea, and deepened strategic cooperation on advanced technology through platforms such as the Quad, AUKUS, and the U.S.-EU Trade and Technology Council. These partnerships deepen our strategic alignment, strengthen our technology leadership, and advance our shared values across key technologies like AI, biotechnology, quantum, and space.

Now let’s talk about tools. To deliver on the promise of these partnerships, we need to reimagine the tools of American economic statecraft to wield them for maximum impact. First, we should put U.S. sovereign loan guarantee authority to greater use, including via multilateral development banks. When the United States guarantees to private lenders that a foreign government’s borrowing will be repaid, lenders charge substantially lower rates – similar to what the United States enjoys – cutting the borrowers’ costs and freeing up fiscal space, at little cost to the U.S. taxpayer. 

Second, we’re crowding in private investment using tools like the Development Finance Corporation’s equity investments, risk insurance, and technical assistance tools. We’ll lean forward in promoting collaboration with the development finance institutions of our partners, for instance by sharing project pipelines and due diligence findings, pooling risk, and deploying complementary tools across the capital structure. We’re using Ex-Im banks’ financing and export credits to promote investment and supply chain resilience. And we should explore suggestions to further boost their impact by evolving the criteria and U.S. content requirements for deploying these tools. 

We also need to explore ways to make common cause with our partners in driving strategic investments in critical technologies and supply chains, potentially leveraging the Defense Production Act Title Three authority, and the Department of Energy’s Loan Program Office, which provides debt financing for strategic energy infrastructure investments. The CFIUS Accepted Foreign States List, the whitelist, can be maintained and updated with an eye towards promoting FDI into the United States in key sectors. We can imagine a new strategic resilience fund that would make direct investments at home and abroad in supply chains for critical minerals and scarce inputs used to produce clean energy and foundational technologies. And, maybe a moonshot idea, we could look at mechanisms to create a U.S. sovereign wealth fund to make long-term strategic investments in high-standard infrastructure projects. 

Now, let’s talk about institutions. With development financing needs estimated in the trillions and limited domestic fiscal space, we simply must focus on high-leverage solutions that mobilize allies to partner with us so that we’re collectively competing at scale. This is a matter of basic math, and the international financial institutions must be central to our efforts in making this happen. That’s why the administration has placed its focus on building better, bigger, and more effective MDBs. For the last year, the United States has led a major initiative to evolve the MDBs’ mission, and vision, incentives, operating model, and financing capacity. 

These efforts are already paying off at scale, with over $200 billion worth of new lending capacity generated by the reforms we have already secured. On top of that, last year President Biden helped drive a G-20 leaders pledged to deliver an immediate boost to the lending headroom at the World Bank to support low- and middle-income countries and demonstrate the promise of MDB reform. To help meet that goal, President Biden has requested appropriations from Congress that would catalyze $36 billion worth in new lending headroom at the World Bank. The return on taxpayer funding for this program is staggering. 

Every dollar we pledge directly generates $50 of new low-cost transparent lending, while reinforcing U.S. leadership in a crucial international institution. Moreover, we expect our contribution to mobilize other countries to follow suit, further multiplying the resources generated for partners across the world. Separately, at the IMF we’ve secured funding and authorization that allows the United States to lend up to $21 billion to the IMF’s program that provides highly concessional financing to the world’s poorest countries. The cost to U.S. taxpayers? Just $20 million, one-thousandth the amount our investment will mobilize in poor countries. 

But to truly empower our partners in the developing world, we must take bold action to break the debt impasse so they can once again make critical investments in themselves. For the first time in decades, progress on the most fundamental indicators of global development have reversed. And far too often, countries are foregoing investments in their own development to service crushing amounts of debt. This should simply not be the case. When countries are committed to sound policies and pursuing ambitious development and sustainability goals, creditors should respond with commensurate ambition. 

The challenge today is not just about less money flowing in. It’s more about money flowing out. As a share of both exports and tax revenues, external debt service is now at levels not seen in twenty years. At its root, the debt stalemate is a collective action problem. Ultimately, the solution requires the key parties – the Paris Club and China – to summon the political will for pragmatic compromise. 

We can imagine a grand bargain along the following lines: First, more effective norms for official creditors. Countries that wish to make credible reforms and to invest in their own sustainability, for example, by investing in health security or adapting to climate change, they should be offered a path to pause spending scarce resources on debt payments. We should no longer expect new lending from the IMF or the World Bank to get channeled into paying back high-interest-rate debt from other creditors. Specifically, the IMF should enforce the norm that official creditors should commit not to take money out of these countries during a specified recovery period. Creditors could achieve this in a variety of ways. For example, a debt suspension and reprofiling, debt swap, or net new inflows. Any new debt should meet the highest standards of transparency and sustainability.

Second, we need better discipline to ensure that creditors who aren’t living up to these norms can no longer hold a country hostage. If China or any other creditor refuses to meet these norms in a timely fashion, then the IMF should do for sub-Saharan Africa and other debt-constrained countries what it did for Ukraine in 2015: lend to countries in arrears to an official holdout creditor with a clause that prevents their financing or debt relief from servicing the claims of recalcitrant creditors.

Third, the private sector needs to participate in the solution. Debt suspensions and private-sector bond exchanges could be critical parts of the solution. And the public sector should deploy tools like credit enhancements and debt swaps to motivate action.

Finally, the international financial system and other donors need to step up. International financial institutions, climate funds, and bilateral development finance institutions should provide coordinated support for high-ambition countries to ensure they have the surge of resources they need to execute. The tools I spoke about earlier – loan guarantees; enhanced IMF resources; and bigger, better, more effective MDBs – they should ensure that countries that turn away from opaque, cost-prohibitive borrowing practices have scalable, transparent, and sustainable alternatives.

Whatever approach we adopt, we have to ensure that the incentives set by multilateral institutions, private actors, and official creditors will collectively motivate borrowers to make investments that pay for themselves in the long run. That's the definition of sustainability.

The analytical challenges of executing sound international economic policy along the lines that I’ve described, they’re humbling. We’re designing policy in an era of strategic interdependence. Our linkages with partners, competitors, and adversaries alike through commerce, technology, information, climate, health, and migration, they’re without recent precedent. They offer tremendous promise, but also if they’re managed poorly they create profound vulnerabilities.

The degree of interconnectedness raises the stakes when it comes to deploying the economic tools that I’ve – that I’ve described. The second- and third-order impacts of the policy actions we take, they’re hard to foresee, they’re hugely consequential, and they’re long-lasting. This is, in effect, multistage, multiplayer game theory. We have choices to make; so do our allies and partners, competitors and adversaries, the private sector, and others. We need the analytical capability to judge how our interventions, both restrictive measures and affirmative inducements, will interact with the decisions made by others, and we have to judge whether the net impact will make us better off in equilibrium. We also need the dexterity to recalibrate our strategies if and as needed.

As a concluding point, we know the global economy is not zero sum. We know the United States thrives when our partners do, and vice versa. So while we’re always take action when necessary to protect our workers, industries, communities, and resilience, we know that we benefit most when the competition is based on the ability to attract talent, ideas, investment, collaboration, and goodwill.

The American model is one that must continue to imagine, invent, and inspire. We don’t take it for granted. We’re committed to investing in that vision, and we’re confident that if we do so the United States will continue to lead and shape the international economic system for generations to come. Thank you. (Applause.)